California Insurance License Exam Practice Test Practice Question
An employee has just received a huge bonus check. She uses the bonus money to buy an annuity that will immediately begin paying $400 a month to her. This is called a
Correct Answer: C
Rationale: The chosen option describes an annuity that starts payments immediately after a lump sum investment, which aligns with the scenario provided.
Option A, deferred annuity, refers to an annuity that begins payments at a later date, not immediately.
Option B, variable annuity, involves payments that fluctuate based on investment performance, which is not indicated here as the payments are fixed at $400 monthly.
Option D, flexible premium deferred annuity, allows for multiple contributions and delays payments, contradicting the immediate payment feature of the scenario. Thus, option C accurately captures the nature of the annuity described.
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