4. Retirement Annuities

Question 1

A … is a person that can be included as a third person in the life insurance policy without being a life insured on the policy.

Answer 1

beneficiary

Question 2

The beneficiary has no … to the life insurance policy. He/she is only nominated for the proceeds of the policy when it is due.

Answer 2

specific rights

Question 3

A (1)… is an annuity that is taken out without there being any legal compulsion to do so, whilst a (2)… is one that has to be given effect to by operation of some law.

Answer 3

(1) voluntary purchase annuity

(2) compulsory purchase annuity

Question 4

Annuity investments are beneficial because they provide a (1)…

Annuity investments also help investors to invest money over (2)…

Answer 4

(1) definite & guaranteed monthly income

(2) the long term

Question 5

Current contributions by a member to any … are deductible from his taxable income.

Answer 5

retirement annuity fund

Question 6

If the member has a dependent and also nominated a beneficiary, then …

Answer 6

the benefit will be paid in proportions determined by the person managing the fund

Question 7

If there is no dependents and no beneficiary was nominated, then ..

Answer 7

the benefit will form part of the deceased estate

Question 8

If the fund within 12 months becomes aware of a dependent or dependents of the member, the benefit shall be …

Answer 8

paid such proportions determined by the person managing the fund

Question 9

If there is no trace of a dependent within 12 months and the member has designated a nominee, …

The designation of the nominee has to be in writing.

Answer 9

the benefit will be paid to the nominee

Question 10

Name the three types of annuities:

Answer 10

1. Fixed annuity
2. Variable annuity
3. Indexed annuity

Question 11

There are a number of avenues that can be used to produce an income but none are more permanent, or secure, than an … purchased from an insurer.

Answer 11

annuity

Question 12

Name two features of annuity investments:

Answer 12

1. not restricted to any contribution or income limits

2. the earnings earned through them are tax exempt

Question 13

… are those annuities in which the interest rate accorded to the investor is on a fixed and guaranteed basis as per the initial contract.

Answer 13

Fixed Annuities

Question 14

… are the latest annuities in such investments and are closely related to the financial index.

Answer 14

Indexed Annuities

Question 15

… are annuities based on the performance of mutual funds on which it is dependent upon and hence offers no guarantee as far as returns are concerned.

Answer 15

Variable Annuities