Types of Policies
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
More types of policies questions
- As an ordinary whole life policy matures over time and cash values increase, what happens to the insurer's net amount at risk?
- At what point does a standard ordinary whole life policy reach its ultimate maturity date?
- Before buying variable life, an applicant wants authoritative product-specific details about fees, investment options, and death-benefit features. Which document should the applicant request?
- Compared with standard level term for the same face amount, how does return-of-premium term usually price the added refund feature?
- Despite investment performance fluctuations in a variable whole life policy, what minimum guarantee does the insurer provide?
- During which annuity phase does the contract value grow before scheduled income payments begin?
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