California Insurance License Exam Practice Test Practice Question
What is the difference between deferred annuities and immediate annuities?
Correct Answer: D
Rationale: Deferred annuities are designed to accumulate funds over a longer period before payouts begin, allowing for growth through investment. This distinguishes them from immediate annuities, which start payments almost right away.
Option A is incorrect; both types of annuities can cover multiple lives depending on the contract. Option B is misleading; deferred annuities often do have surrender charges if funds are withdrawn early. Option C is also incorrect; while deferred annuities may have longer accumulation phases, the liquidation period is not inherently longer than that of immediate annuities.
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