Life Annuity

    graph TD;
	    A[Start Saving/ Contributing] --> B{Do You Buy Your Annuity?}
	    B -->|Yes| C[Make a Lump Sum Payment];
	    B -->|No| D[Continue Saving/Contributing for a Period];
	    C --> E[Immediate Payments Begin];
	    D --> F[Payments Start After a Deferral Period];
	    E --> G[Receive Payments Monthly/Quarterly/etc.];
	    F --> G;
	    G --> H[Continue until Death];

## What is a life annuity primarily used for? - [ ] Buying a car - [x] Providing guaranteed retirement income - [ ] Taking vacations - [ ] Random spending sprees > **Explanation:** A life annuity is primarily designed to provide guaranteed income for retirement—ideal for fulfilling those dreams of relaxation rather than just making routes on Google Maps! ## How does a life annuity payment structure typically work? - [x] Continues until the annuitant's death - [ ] Ends after 30 years - [ ] Is based on stock market performance - [ ] Stops at retirement age > **Explanation:** A life annuity pays out until you decide to call it quits in your grand journey of life, rather than sorting out 30-year mortgage payments. ## If you buy a life annuity, what kind of risk do you reduce? - [x] The risk of outliving your income - [ ] The risk of high interest rates - [ ] The risk of bad investment - [ ] The risk of losing your home > **Explanation:** With a life annuity, you'll no longer have to worry about living it up but ending up flat broke; it'll keep rolling out the dough! ## What happens if an annuitant dies during the accumulation phase? - [ ] All money is gone forever - [x] Money usually goes to beneficiaries - [ ] Payments continue to the government - [ ] It keeps rolling into the next life! > **Explanation:** While you're lounging in relaxation, your cash can still work—passing on to those you've left behind, instead of the IRS! ## Which type of payment plan can a life annuity provide? - [ ] Only one time at the end - [ ] Bi-weekly payments - [x] Monthly, quarterly, semi-annual, or annual payments - [ ] Only when they feel like paying > **Explanation:** A life annuity reveals its flexible side with various frequency options! Talk about a divine planner working out your monthly budget! ## What is a deferred life annuity? - [ ] Payments start immediately - [x] Hides a secret stash until a later date - [ ] Never works - [ ] Requires a circus act for payouts > **Explanation:** Think of a deferred life annuity as your hidden treasure chest, waiting to pay out once the time is just right—and it doesn't require a treasure map! ## Can a life annuity be purchased with withdrawal features? - [ ] No, not ever - [ ] Of course, what could go wrong? - [x] Sometimes, but often at a cost - [ ] Why would you want to withdraw? > **Explanation:** It could feature withdrawals, but temper those expectations—like indulging in dessert only after dinner! ## When are payments from a life annuity typically taxed? - [ ] All at once, in the last year - [ ] Never, they are tax-free - [x] As ordinary income, when received - [ ] Only on sunny days > **Explanation:** Uncle Sam wants his share! Payments are typically taxed like your paycheck—meaning budgeting is an essential exercise. ## What's a major benefit of a life annuity? - [x] Guaranteed income for life - [ ] That's a good joke... - [ ] More things than you can imagine - [ ] A magic wand that makes you rich > **Explanation:** Guaranteed income! It's the financial equivalent of knowing your groceries are reliably there, rather than finding empty shelves—all thanks to a good life annuity. ## When should you consider a life annuity? - [ ] When you’re stocking up on candy - [x] As part of a retirement strategy - [ ] Do you mean a housewarming gift? - [ ] When you have nothing else planned > **Explanation:** If you're prepping for retirement, a life annuity can be a sweet option—and totally not just a sugary fix for your sweet tooth!