annuities Flashcards
life annuity
garantees that an annuiant cannot outlive the payments
accumulation period
the time during which funds are being paid into the annuity
annuity or pay out period
refers to the point at which the annuity ceases to be an accumulation vehicle and begins to generate regular benefit payments
benefits
are paid out monthly, quarterly, semiannually, or annually
surrender charges
apply for the first 5-8 years of the contract
bailout provision
allows the annuity owner to surrender the annuity without surrender charges if interest rates fall below a stated level within a specific period
annuity principal
funded with a single premium or overtime with a series of periodic premiums
fixed annuities
provide a garanteed rate of return
equity indexed annuities are a type of fixed annuity that offer the potential for higher credited rates of return than their traditional counterparts, but also guarantee the owners principal
a market value adjusted annuity’s interest rate is fixed and guaranteed if the contract is held for the period specified in the policy
variable annuities
shift the investment risk from the insurer to the contract owner
to sell you must be registered with the FINRA and have state insurance license
deferred annuities
accumulate interest earnings on a tax deferred basis and provide income payments at some specified future date
annuity income options
straight life income, cash refund, installment refund, life with period certain, joint and survivor, fixed amount, and period certain
fixed amount
the annuitant recieves a fixed payment until the contract value is exhausted
straight life income annuity
pays the annuitant a guaranteed income for the rest of their life
period certain income
not based on life contingency
life with period certain
option payout approach is designed to pay the annuitant an income for life but guarantees a definite minimum period of payments
cash refund option
provides a guaranteed income to the annuitant for life
installment refund option
guarantees that the total annuity fund will be paid to the annuitant or benefeciary
temporary annuity certain
payments are guaranteed to be made for a specified number of years
joint and full survivor
provides payment of the annuity to two people
joint and 2/3 survivor
the survivors income is reduced to 2/3 of the original joint income
joint and 1/2 survivor
the survivors income is reduced to one half of the origina joint income
qualified plan
a tax deferred arrangement that’s established by an employer to provide retirement benefits for employees
tax sheltered annuity (TSA)
type of annuity plan reserved for non profit organizations and their employees, as well as school system employees
