15 Flashcards
Payments that the annuitant makes into variable annuity are invested in insurer’s separate acct not general acct
Underlying investment in variable annuity
Separate acct not part of insurance company’s own investment portfolio and is not subject to restrictions applicable to insurer’s own general acct
Underlying investment in variable annuity
Issuing insurance company does not guarantee minimum interest rate
Interest rate in variable annuity
Considered a security and is regulated by securities exchange commission in addition to state ins regulations
License requirements in variable annuity
Agent selling variable annuities must hold securities license in addition to life insurance license agents or companies selling variable annuities must be registered with FINRA
License requirements in variable annuity
Purchase accumulation units in the fund similar to buying shares in a mutual fund
Variable premiums
Represent ownership interest in separate acct and upon Annuitization acc units are converted to
Annuity units
Income paid to annuitant based on value of
Annuity units
Number of annuity units recd remains level but
Unit values will fluctuate until actually paid out to annuitant
Fixed annuities that invest on a relatively aggressive basis to aim fo higher returns
Indexed or equity indexed annuities
Like fixed annuity this has guaranteed minimum interest rate typically 3 or 4% which provides a guarantee for a certain rate of growth
Indexed annuity
indexed annuity has a guaranteed minimum interest rate typically
3 or 4 % which provides a guarantee for certain rate of growth
End of contract term annuity will be credited with greater of guaranteed minimum value
Or current indexed value
Current interest rate credited is tied to a familiar index
Like standard and poor’s 500
Company may keep first 4% earned for itself but any accumulation in excess of 4% is credited to annuitant’s acct
If interest earners is 12% and company keeps
4% and credits the client’s acct with 8%
