Podcast
Questions and Answers
What is a reversionary annuity primarily designed to provide?
What is a reversionary annuity primarily designed to provide?
- Income only during the accumulation phase
- Benefits to a beneficiary after the annuitant's death (correct)
- Ongoing income for the annuitant's lifetime (correct)
- Lump-sum payment at retirement
In a reversionary annuity, who typically receives the payments after the initial annuitant passes away?
In a reversionary annuity, who typically receives the payments after the initial annuitant passes away?
- A designated beneficiary (correct)
- The insurance company
- The original annuitant's estate
- No one, payments cease
Which of the following best describes the financial benefit of a reversionary annuity?
Which of the following best describes the financial benefit of a reversionary annuity?
- It offers adjustable payment options
- It guarantees principal investment return
- It ensures lifetime income for two lives (correct)
- It provides tax-free withdrawals
What risk does a reversionary annuity help mitigate for the annuitant?
What risk does a reversionary annuity help mitigate for the annuitant?
What is often a characteristic feature of a reversionary annuity?
What is often a characteristic feature of a reversionary annuity?
Study Notes
Reversionary Annuities
- A reversionary annuity is designed to provide a stream of income payments to a beneficiary after the death of the primary annuitant.
- In a reversionary annuity, the payments typically go to the surviving spouse or another designated beneficiary.
- The financial benefit of a reversionary annuity is that it provides income to the beneficiary after the death of the primary annuitant.
- Reversionary annuities help mitigate the risk of the primary annuitant outliving their savings.
- A common feature of reversionary annuities is the requirement of a second life, meaning the payments depend on the life expectancy of both the primary annuitant and the beneficiary.
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Description
Test your knowledge on reversionary annuities with this quiz. Explore key concepts such as payment beneficiaries, financial benefits, and risk mitigation associated with reversionary annuities. Perfect for finance students and those interested in retirement planning.
