Annuities Flashcards
Annuities protect against the risk of
Living too long
The principle function of an annuity
The liquidation of an estate
The Annuity Period is when
The annuity ceases to accumulate value and begins to generate payments
An Annuity Accumulation Period is
The period in which payments are made into the Annuity and value is acculated
Annuities may be funded with
A Single Premium
Periodic payments which may be Fixed or Flexible Premium
Annuity Benefits may begin
Immediate Annuity benefits begin in the first benefit period after funding
Deferred Annuity benefits begin after a specified (usually several years)
Three types of annuities
Fixed Annuities
Variable Annuities
Indexed Annuities
Fixed Annuities- Guaranteed?
Yes. Principal, interest and benefit payments. Interest may include a Currant Rate and a Minimum Guaranteed Rate.
A Life With Period Certain Annuity provides payments for
A guaranteed period even if the annuitant dies and continue for life even after the guarantee period.
Joint Life Annuity provides
A specified income for two or more persons and ceases after the death of the first person.
A Joint And Survivor Annuity pays
Benefits to two persons with payments continuing to the survivor for life after death of the first person
Variations of the Joint And Survivor Annuity
Joint And Two Thirds Survivor
Joint And One Half Survivor
Variable Annuities are
Invested in Securities and the annuity income varies with the market. VA’s were developed as a hedge against inflation yet also carry risk. Investments are held in a separate account and regulated by FINRA
Indexed Annuities are
Similar to Fixed Annuities with the owner’s interest tied to an equity index eg Standard & Poor’s 500 Index. It cannot decrease in value.
Straight Life Annuity provides payment
From a specified date for the rest of the Annuitant’s life. This option pays the highest payments. If the Annuitant dies early much of the value will be lost.
