Question

1. the primary reason a consumer should purchase an annuity is to provide a death benefit to his or her heirs.

○ a. true
○ b. false

1. the basis for the interest credited to angelas annuity is the growth of the s&p 500. what kind of annuity does angela own?

a. an indexed annuity
b. a traditional fixed annuity
c. a variable annuity
d. a value-adjusted annuity

1. which annuity design is appropriate for a consumer who seeks a way to grow and accumulate funds for the future?

a. immediate annuity
b. deferred annuity
c. both a and b
d. neither a nor b

Explanation:

1. Annuities are primarily designed to provide a steady income stream during retirement, not a death benefit (life insurance is focused on death benefits for heirs).
2. Indexed annuities tie their interest credits to the performance of a specific market index, such as the S&P 500. Fixed annuities have set interest rates, variable annuities invest in sub-accounts, and value-adjusted annuities are not tied to index growth.
3. A deferred annuity is structured to allow funds to grow and accumulate over time before payouts begin, while an immediate annuity starts payouts right away, so it does not serve the goal of future accumulation.

Answer:

1. b. False
2. a. an indexed annuity
3. b. deferred annuity