Annuities — New York exam
10% of the scored questions — about 10 of 100. This section is general life insurance knowledge, shared with every state's exam.
1 / 8
A buyer wants to fund an annuity gradually over working life and take income at retirement. Which design fits?
Answer and explanation
Answer: A. A flexible premium deferred annuity accepts payments over time and defers income to a later date, which matches funding from earnings and drawing at retirement. The single premium designs take one payment, and an immediate annuity begins paying at once.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, deferred annuities and premium payment options
2 / 8
A contract holder elects to begin receiving income. Which phase has begun?
Answer and explanation
Answer: D. The annuity period, sometimes called the payout or liquidation period, is when the contract pays income to the annuitant. Accumulation precedes it, and the free look and contestable periods run from delivery and issue for different purposes.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, annuity period
3 / 8
A deferred annuity stops building value for future income and begins making scheduled income payments. Which phase has begun?
Answer and explanation
Answer: C. The payout phase begins when the annuity starts making income payments. During the accumulation phase, value changes before payouts begin; the other choices are not the two fundamental annuity phases described in the guide.Source: NAIC — Buyer’s Guide for Deferred Annuities — Guide page 1, How Deferred Annuities Are Alike — accumulation period and payout period
4 / 8
A fixed annuity states a minimum rate and a current rate. What is the difference?
Answer and explanation
Answer: C. The guaranteed minimum is the floor the insurer promises for the contract, while the current rate is what is actually being credited and may be changed, though it may not fall below the guaranteed minimum. The guarantee is the promise and the current rate is the practice.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, minimum versus current interest
5 / 8
A married couple wants annuity income to continue while either of them lives. Which option fits?
Answer and explanation
Answer: D. A joint and survivor annuity continues paying while either annuitant lives, which is what continuing income for the survivor requires. A joint life option stops at the first death, separate contracts each stop at their own annuitant's death, and an annuity certain runs for a term rather than for life.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, single life versus multiple life
6 / 8
A worker buys an annuity at age 45 and plans to begin income at age 65 after years of tax-deferred accumulation. Which classification best fits?
Answer and explanation
Answer: A. A deferred annuity postpones income to a later date and permits an accumulation phase before payouts begin. An immediate annuity starts income soon after purchase, while the other choices are life insurance rather than annuity timing classifications.Source: SEC — Investor.gov Annuities — What kinds of annuities are there? — immediate and deferred annuities
7 / 8
An annuitant wants income for life but wants a minimum amount to reach heirs if she dies early. Which option fits?
Answer and explanation
Answer: D. A life option with a period certain or refund guarantee pays for life and assures a minimum to beneficiaries if death comes early. Pure life offers no such guarantee, an annuity certain is not a life contingency at all, and an interest-only arrangement leaves the principal untouched.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, life contingency options
8 / 8
An annuity is owned by a parent and measured on a child's life. Who may surrender the contract?
Answer and explanation
Answer: B. Surrender is a right of ownership, so the owner exercises it. The annuitant supplies the measuring life without holding the contractual rights, and the insurer's consent is not what the right depends on.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, owner distinct from annuitant
All 28 annuities questions
- An annuity owner dies during the accumulation period. What ordinarily happens?
- During which annuity phase does the contract value grow before scheduled income payments begin?
- How are accumulation units converted in a variable annuity when the contract owner chooses to annuitize?
- How does a fixed indexed annuity credit interest?
- In an annuity contract, whose life measures the income payments?
- The index referenced by a fixed indexed annuity falls sharply in a year. What ordinarily happens to the contract value?
- What benchmark rate is used in variable annuity payout calculations to determine whether monthly annuity payment amounts increase or decrease?
- What characterizes a single premium immediate annuity?
- What distinguishes an annuity certain from a life contingency option?
- What does a guaranteed minimum withdrawal benefit provide?
- What does a nonforfeiture provision give an annuity owner who stops paying?
- What does selling a variable annuity require beyond a New York life license?
- What happens during the accumulation period of a deferred annuity?
- What is the tax feature that makes annuities attractive for retirement saving?
- What risk does a life annuity protect the annuitant against?
- Where are the assets backing a fixed annuity held?
- Which payout option produces the largest periodic income for a given sum, and why?
- Who bears the investment risk in a variable annuity?
- Why do deferred annuities commonly carry surrender charges in the early years?
- Why might an annuity be used to accumulate funds for education?
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