Insurance MCQ Questions and Solutions with Explanations | Commerce

Annuities are not classified on the basis of Profits/Bonus. Annuities are classified according to the nature of the payment and the duration of time for payment. If, however, the investment has fared poorly, the size of the payments decreases. A straight annuity is a contract by an insurance company to make variable payments at monthly or yearly intervals.

Both the statements are correct.
Annuity would stop strictly with the death of the annuitant and Annuity could be paid to the surviving spouse in case of joint life annuity.

In a joint life annuity, Annuity would cease if the spouse is to predeceased the annuitant.

Immediate Annuity and Deferred Annuity are the types of Annuities.
An immediate annuity is an insurance product that gives the buyer a guaranteed stream of income in exchange for a lump sum of cash.
A deferred annuity is an insurance contract designed for long-term savings. Unlike an immediate annuity, which starts annual or monthly payments almost immediately, investors can delay payments from a deferred annuity indefinitely. During that time, any earnings in the account are tax-deferred.

Under Immediate annuity, the premium has to be paid in lumpsum. An immediate annuity is an insurance product that gives the buyer a guaranteed stream of income in exchange for a lump sum of cash. Immediate annuities have several advantages, such as long-term stability, tax-deferred income, and monthly income payments for the rest of your life.

These annuities may be purchased with a single payment or, as is more often the case, with a series of periodic payments.

A deferred payment annuity allows the investment, known as the premium, to grow both by contributions and interest before payments are initiated. A deferred payment annuity is also known as a "deferred annuity" or a "delayed annuity."

Accumulation & Payout phases are the 2 distinct phases of a Deferred Annuity. There are two phases for a deferred annuity: the accumulation or deferral phase in which the customer deposits (or pays premiums) and accumulates money into an account; the distribution or annuitization phase in which the insurance company makes income payments until the death of the annuitants named in the contract.

There are two phases for a deferred annuity: the accumulation or deferral phase in which the customer deposits (or pays premiums) and accumulates money into an account; the distribution or annuitization phase in which the insurance company makes income payments until the death of the annuitants named in the contract.

Every Pension is an Annuity.
Pension scheme gives an opportunity to invest and accumulate savings and get lump sum amount as regular income through annuity plan on retirement.