14.2b

Question 1

Similar to a life insurance policy’s nonforfeiture provisions, if an annuitant stops paying premiums and surrenders the annuity contract to the insurer, the accumulation period will end and the ______ will begin at the time of surrender. The annuity’s accumulated investment amount is paid to the annuitant; however, the insurer typically subtracts a surrender charge from the annuity before the payout begins.

Answer 1

annuity payout period

Question 2

During the annuity’s payout period, the contract begins to distribute the premium deposits and earned interest to the annuitant named in the contract. Both the owner’s premium deposits and earned interest define an annuity payment from the insurer during the annuity period. Again, premium payments are deposited by the contract owner on an ______ basis, so only the interest earned from the annuity are taxed as it is distributed to the annuitant.

Answer 2

after-tax

Question 3

______ – The annuity payout from the insurer remains constant for the duration of the annuity period to the annuitant

Answer 3

Fixed Payment

Question 4

______ – Annuity distribution payments can also fluctuate depending on the return of interest at the time of payout.

Answer 4

Variable Payment

Question 5

______, also known as a ______, this type of annuity payment option provides an annuitant with a guaranteed income for the entirety of his or her life; however, if the annuitant dies before the principal sum is depleted, distribution payments stop and any remaining amount is forfeited to the insurer instead of being paid to a beneficiary.

Answer 5

Straight Life Income Annuity

Pure Life annuity