14.1c Flashcards
Similar to an individual annuity, a group annuity provides monthly income to members of the group. Each member of the group is provided with a _____ that defines his or her participation rights in the group annuity.
certificate
A group annuity is often purchased to fund ‘defined benefit’ pension plans in which an employer establishes to provide ______. Likewise, individuals purchase annuities to provide a structured future stream of income.
future pension to company employees
Often set up by employers as part of a retirement compensation package, a qualified annuity is often used to fund pension plans, 401(k) plans, 403(b) plans, SEPs, and other retirement plans on a tax-deductible basis. Based on the tax-deferred eligibility of the group, funding into the plan by the employer is paid with ______.
pre-tax dollars
On the individual level, an annuity is used to provide a future stream of income for the individual to serve as ______, or as a source of funding for higher education, such as through an Individual Retirement Annuity (IRA).
retirement income
As with a life insurance policy, riders can be added to an annuity to provide additional benefits for the annuitant. While an annuity rider typically requires ______, the benefits provided by such rider can greatly benefit the annuitant in the future.
additional premium