AD Banker Comprehensive Practice Exam

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Enhance your exam readiness with the AD Banker Comprehensive Exam guide. Includes flashcards and multiple-choice questions with explanations.

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Which product allows Susan, age 65, to have a sum distributed to her over her life starting next month?

Single Premium Immediate Annuity
Flexible Premium Deferred Annuity
Single Premium Deferred Annuity
Flexible Premium Immediate Annuity

The correct answer is: Single Premium Immediate Annuity

A Single Premium Immediate Annuity is designed specifically for individuals who want to convert a lump sum of money into a series of income payments that begin immediately. In Susan's case, being 65 and seeking to have a sum distributed to her over her lifetime starting next month aligns perfectly with the features of this product. This type of annuity allows Susan to pay a single premium (a one-time payment) to the insurance company, which then guarantees her a stream of payments that can last for the length of her life. Immediate annuities kickstart this payment process typically within one month of the purchase, providing quick access to income. On the other hand, the other options mentioned focus on either deferring income (like the deferred annuities) or providing flexibility in terms of premium payments without guaranteeing an immediate payout. Therefore, only the Single Premium Immediate Annuity meets Susan's criteria of immediate payouts starting next month.