Annuities

Question 1

What is an annuity?

Answer 1

contract that provides income for a specified number of years or for life.

Question 2

Who has the rights of an annuity?

Answer 2

the owner

Question 3

what is the annuitant?

Answer 3

person who recieved benefits or payments from the annuity.

Question 4

what is the accumulation period?

Answer 4

aka pay in period. is the priod of time which the owner makes payment.

Question 5

what is the annuity period?

Answer 5

aka annutization period liquidation period or the payout period. when the annuity starts paying the annuitant.

Question 6

what is single premium immediate annuity?

Answer 6

purchased in one big lump payment. Starts paying out within one year.

Question 7

what is a deffered annutity?

Answer 7

starting paying out in over a year. Used a lot for retirement. Person will receive current interest rate or guaranteed interest rate whichever is higher.

Question 8

what is a single premium deffered annuity?

Answer 8

one lump sum payment. Starts paying in over one year.

Question 9

What is the penalty for early withdrawls?

Answer 9

10% penalty for early withdrawls prior to age 59 and a half.

Question 10

what are surrender charges?

Answer 10

helps company compensate for loss of investment due to early surrender of a deferred annuity.

Question 11

what is a the formula for money at surrender?

Answer 11

at surrender owner gets= premium +interest- surrender charges

Question 12

what is a waiver?

Answer 12

annuity contracts provide a waiver if the annuitant is in long term care for more than 30 days.

Question 13

what is a bail out provision?

Answer 13

contraact holder can foregiht annuity if interst rates drop below a certain level without paying surrender charge.

Question 14

what is death benefits?

Answer 14

if annuitant dies during accumulation period the insurer has to return cash values or total premiums which ever is greater.

Question 15

what is pure life?

Answer 15

aka life only or straight life. The payment ceases at death and provides the highest monthly benefits.

Question 16

what is life with guaranteed minimum?

Answer 16

if annuitant dies it goes beneficary entire principal is paid.

Question 17

what is life with period certain.

Answer 17

provides income for life and a for a certain period.

Question 18

what is installment refund?

Answer 18

when annuitant dies. annuitants beneficary will continue to receive guaranteed installments until the entire principal has been paid.

Question 19

what is cash refund?

Answer 19

when annuitant dies beneficary recieves a refund of principal amount or the original amount paid into annuity. Whatever payments were already made.

Question 20

what is fixed period installments?

Answer 20

insured selects time frame insurer selects how much payment

Question 21

what is fixed amount installments?

Answer 21

insured selects how much payment insurer selects how long.

Question 22

what are the features of fixed annuities?

Answer 22

1. guranteed minimum interest rate
2. income payments that do not vary
3. company guarantees payment and duration

Question 23

where are fixed annuties deposited?

Answer 23

insurance companies general account

Question 24

what are indexed annuities?

Answer 24

are fixed annuties that invest on a relatively aggressive basis and aim for high returns.

Question 25

what is a variable annuity?

Answer 25

is a hedge against inlfation and is variable from the standpoint that the annuitant may receive different rates of return.

Question 26

what are the 3 main characteristics of variable annuities?

Answer 26

1. underying investment
2. interest rate
3. license requirements

Question 27

are quailfied and non qualified annuities tax deferred?

Answer 27

yes.