Life & Health Insurance Exam Life & Health Insurance Annuities and Retirement Plans 2

Question 1

Which annuity payout option provides income for the annuitant's lifetime but guarantees payments for a minimum period even if the annuitant dies early?

Accepted Answer

Life with period certain

Answer

A life with period certain annuity guarantees payments for a specified minimum period regardless of whether the annuitant survives that period.

Question 2

What is the primary tax advantage of a traditional IRA contribution for an eligible individual?

Accepted Answer

Contributions may be tax-deductible

Answer

Eligible individuals may deduct traditional IRA contributions from taxable income, reducing their current tax liability.

Question 3

An annuitant selects a joint and 50% survivor option. If the primary annuitant dies, what percentage of the original payment does the survivor receive?

Accepted Answer

50%

Answer

Under a joint and 50% survivor option, the survivor receives exactly half of the original annuity payment after the primary annuitant's death.

Question 4

Which of the following describes a SIMPLE IRA plan?

Accepted Answer

Requires employer matching contributions

Answer

SIMPLE IRAs require employers to either match employee contributions up to 3% of compensation or make a flat 2% nonelective contribution.

Question 5

What term describes the risk that an annuitant will outlive their assets or income stream?

Accepted Answer

Longevity risk

Answer

Longevity risk is the risk of outliving one's financial resources, which annuities are specifically designed to mitigate.

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Life & Health Insurance Annuities and Retirement Plans 2