16 Flashcards
Annuity payment begins within 1 year
Immediate
Payments begin after 1 year
Deferred
Purchased with a single lump sum payment and provides income payments that start within one year from date of purchase
Immediate annuity
Will make first payment as early as 1 month from purchase date
Immediate annuity called single premium immediate annuity spia
Income payments begin sometime after one year from date of purchase can be funded eeeither lump sum single premium deferred annuities or period payments flexible premium deferred annuities
Deferred annuity
Can vary year to year
Periodic payments
Longer annuity is deferred
More flexibility for payment of premiums it allows
Specify how annuity funds are paid out similar to settlement options used in life insurance that determine how policy proceeds are distributed to beneficiaries
Annuity
Life contingency options
Pure life vs guaranteed max
This aka life only or straight life payment ceases at annuitant’s death no matter how soon in annuitization period that occurs
Pure life
Only provides highest monthly benefits for inidividual annuitant
Life annuity
If annuitant dies before principal amount paid out remainder of principal amount refunded to beneficiary
Life with guaranteed minimum setttlement option
Guaranteed minimum aka
Refund life guarantees entire principal amount paid out
Provides highest monthly benefit but no guarantee that entire principal will be paid out
Pure life annuity
When annuitant dies beneficiary recs lump sum refund of principal minus benefit payments already made option doesn’t guarantee pay any interest
Cash refund
