Exam 14: Annuities and Individual Retirement Accounts

Which of the following statements regarding individual retirement accounts (IRAs)is (are)true? I.If an individual's only income during the year is from investments,he or she cannot make an IRA contribution. II.The funds in the IRA can be used to purchase life insurance on the owner.

Which of the following statements is (are)true with respect to annuities? I.Annuities are the opposite of life insurance. II.The fundamental purpose of annuities is to replace lost income in case of premature death.

Which of the following is a characteristic of longevity insurance?

Which of the following statements is (are)true with regard to the inflation-indexed annuity option? I.The initial monthly payment is lower than the initial payment a fixed annuity would have provided if purchased at the same age. II.Periodic payments to the annuitant are adjusted for inflation.

Insurers offering variable annuities charge a number of expenses.One category of expenses is to pay the fund manager and to pay brokerage fees.This expense is the

Rita is 66 years old.She earned $20,000 this year working part-time at a store and her modified adjusted gross income was $28,000.Rita is considering making a $3,000 contribution to her traditional IRA.Which of the following statements is true regarding this contribution?