ANNUITIES

Question 1

A retirement plan for certain employees of public schools, employees of specific tax-exempt organizations, and certain ministers

Answer 1

403(b) Plan

Question 2

applies to annuities. if an annuity is exchanged for another annuity, a “gain” for tax purposes is not realized. This is also true for a life insurance policy or an endowment contract exchanged for an annuity. However, an annuity cannot be exchanged for a life insurance policy. This provision in the tax code allows you, as a policy holder, to transfer funds from a life insurance, endowment, or annuity to a new policy, without having to pay taxes

Answer 2

1035 contract exchange

Question 3

when the premiums an annuitant pays into annuities are credited as accumulation units. This may continue between the time after premiums have ceased, but the payout has not yet begun. At the end of this period, accumulation units are converted to annuity units

Answer 3

accumulation period

Question 4

make up the value of contributions made by the annuitant less the deduction for expenses. The value of each of these is a credit to the individual’s account and varies depending on the value of the underlying stock investment

Answer 4

accumulation unitso

Question 5

one to whom an annuity is payable or a person upon the continuance of whose life further payment depends

Answer 5

annuitant

Question 6

the converted accumulation units once variable annuity benefits are paid out to the annuitant. At the time of the initial payout, the annuity unit calculation is made. From then on, the number of these remain the same for that annuitant

Answer 6

annuity units

Question 7

provides that , upon the death of an annuitant before payments totaling the purchase price have been made, the excess of the amount paid by the purchaser over the total annuity payments received will be paid in one sum to designated beneficiaries

Answer 7

cash refund option

Question 8

provide for postponement of the payment of an annuity until after a specified period or until the annuitant attains a specified age. May be purchased on either a single-premium or flexible premium basis. Typically do not begin making income payments for at least one year after the date of purchase

Answer 8

deferred annuity

Question 9

fixed deferred annuity that offers the traditional guaranteed minimum interest rate and an excess interest feature that is based on the performance of an external equity’s market index

Answer 9

equity indexed annuity

Question 10

a fraction used to determine the amount of annual annuity income exempt from federal income tax. It is the total contribution or investment in the annuity divided by the expected ratio

Answer 10

exclusion ratio

Question 11

provides a guaranteed rate of return. the interest payable for any given year is declared in advance by the insurer and is guaranteed to be no less than a minimum specified in the contract. With these, the investment risk is on the insurer

Answer 11

fixed annuity

Question 12

provide for payment of annuity benefit at one payment interval from the date of purchase. Can only be purchased with a single payment. Typically begin paying income within one month of purchase

Answer 12

immediate annuity

Question 13

provides for payment of the annuity to two people. If either person dies, the same income payments continue to the survivor for life. When the surviving annuitant dies, no further payments are made to anyone. A full survivor option pays the same benefit to the survivor. A two-thirds survivor option pays two-thirds of the original joint benefit. a one-half survivor option pays one-half of the original joint benefit

Answer 13

joint life and survivor option

Question 14

designed to pay the annuitant an income for life, but guarantees a definite minimum period of payments. Provides income to the annuitant for life, but guarantees a minimum period of payments Thus, if the annuitant dies during the specified period, benefit payments continue to the beneficiary for the remainder of that period

Answer 14

life with period certain annuity (life annuity with term-certain option)

Question 15

can be attached to a deferred annuity that features fixed interest rate guarantees combined with an interest rate adjustment factor that can cause the actual crediting rates to increase or decrease in response to market conditions. Instead of having the annuity’s interest rate linked to an index as with the equity-indexed annuity, an MVA’s annuity’s interest rate is guaranteed fixed if the contract is held for the period specified in the policy. The market-value adjustment feature only applies if the contract is surrendered before the contract period expires. Otherwise, the annuity functions the same way a fixed annuity does

Answer 15

Market Value Adjustment

Question 16

an annuity income option that guarantees a definite minimum period of payments ID: 10 years

Answer 16

Period certain annuity

Question 17

describes an annuity owner making multiple premium payments to accumulate principal. typically, after the initial premium, these payments are flexible with frequency and amount

Answer 17

periodic payment annuity

Question 18

the original sum of money paid into an annuity through premiums

Answer 18

Principal

Question 19

an annuity for which the entire premium is paid in one sum at the beginning of the contract period. This can be a deferred or _______ _______ ______.

Answer 19

single premium annuity

Question 20

annuity income option that pays a guaranteed income for the annuitant’s lifetime after which payments stop

Answer 20

straight life annuity

Question 21

shift the investment risk from the insurer to the contract owner. Similar to a traditional, fixed annuity in that retirement payments will be made periodically to the annuitants, usually over the remaining years of their lives. Under this, there is no guarantee of the dollar amount of the payments; they fluctuate according to the value of the account invested, primarily in common stocks. Invest deferred annuity payments in an insurer’s separate accounts instead of an insurer’s general accounts (which allow the insurer to guarantee interest in a fixed annuity). because they are based on non-guaranteed equity investments (such as common stock), a sales representative who wants to sell such contracts must be registered with the Financial Industry Regulatory Authority (FINRA) as well as hold a state insurance license

Answer 21

Variable Annuity