What is incorrect regarding annuities? - ProProfs
     

What is incorrect regarding annuities?



A. Annuities do not use the pooling technique to spread risk
B. An owner may change the annuity date, the beneficiary, or the settlement option
C. Once the payout period begins, the annuitant recieves periodic payments
D. The accumulation period is the period prior to the annuitzation date

This question is part of Chapter 14 Annuities

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2 Answers

F. Ray

F. Ray, Student, Kansas City

Answered on Feb 14, 2019

The correct answer to this question is A. An annuity is a series of payments that are paid at a set interval. Examples of annuities are regular deposits to a savings account or monthly rent payments.

Annuities do use the pooling technique in order to spread risk. A life annuity, for example, is product of insurance companies that are sold as a form of longevity insurance.

The insured will make payments to the insurance companies as long as they are alive to pay for their life insurance. The risks are spread evenly among all that are insured in the pooling community.

John Smith

John Smith

Answered on Jul 06, 2017

Annuities do not use the pooling technique to spread risk

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