Annuities

Question 1

Accumulation Period

Answer 1

Pay in period

Question 2

Annuity period

Answer 2

Annuitization period

Question 3

Liquidation period

Answer 3

Pay out period

Question 4

annuity

Answer 4

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

Question 5

what does an annuity protect a person against?

Answer 5

protects a person from outliving his or her money

Question 6

annuities are considered life insurance. True or False?

Answer 6

false

Question 7

Owner

Answer 7

Purchaser of the annuity not necessarily the one who receives the benefits. Owner has all the rights. Owner may be a corporation, trust, or other legal entity.

Question 8

Annuitant

Answer 8

Person who will receive the benefits, for whom the annuity is written. Annuitant must be a natural person.

Question 9

Beneficiarty

Answer 9

Person who receives annuity assets( the amount paid into the annuity or the cash value, whichever is greater).

Question 10

Accumulation period

Answer 10

pay-in-period. the period of time were the owner makes payments into the annuity and period of time were payements earn interest on a tax deffered basis.

Question 11

Annuity period

Answer 11

Annuitization period, liquidation period, or pay-out period, is the time during which payments are made.

Question 12

what happens if an annuitant dies during the accumulation period?

Answer 12

beneficiary will receive either the cash value or the total premiums paid, whichever is greater.

Question 13

What are the premium payment options?

Answer 13

two options Single premium ( one time lump sum payment) or Periodic payments which they are paid in installments.

Question 14

Periodic payment annuities

Answer 14

level premium or flexible premium.

Question 15

Immediate annuity

Answer 15

purchased with a single lump-sum payment, payments start within one year from the date purchased

Question 16

Deferred annuities

Answer 16

income payments begin sometime after one year than can be funded with a single lump sum or periodic payments.

Question 17

Nonforfeiture

Answer 17

deferred annuity has a guaranteed surrender value that is available if owner decides to surrender the annuity prior to annuitization. 100% of the premium paid, less any prior withdrawls and a surrender charge. 10% penalty for early withdrawls

Question 18

Surrender Charge

Answer 18

Purpose of surrender charge is to help compensate the company for loss of the investment value due to an early surrender of a deferred annuity.

Question 19

Pure life

Answer 19

• also known as life-only or straight life
• payment eases at the annuitant’s death
• this option provides the highest monthly
• benefitspayments are guaranteed for a lifetime but no guarantee that all the proceeds will be fully paid out

Question 20

Life with guarenteed minimum: Refund life

Answer 20

if annuitant dies before the principal amount has been paid out, the remainder of the principal amount will be refunded to the beneficiary. This option is also called refund life.

• cash refund:does not guarantee to pay any interest and when the annuitant dies the beneficiary receives a lump-sum refund minus benefit payments that had been paid to the annuitant.
• installment refund:beneficiary will continue to receive guaranteed installmetns until the entire principal amount has been paid out.

Question 21

Period certain

Answer 21

annuity payments are guaranteed for the lifetime of the annuitant, and for a specified period of time for the beneficiary

Question 22

single vs multiple

Answer 22

• single covers one life
• multiple life covers 2 or more lifes. most common are joint and joint and survivor

Question 23

Joint life

Answer 23

two or more annuitants receive payments, payments stop after stop after the first death

Question 24

Joint and Survivor

Answer 24

guarantees an income for two recipients that neither can outlive. after the first death the surviving beneficiary receives 1/2 or 2/3 of what was being received when both were alive.

Question 25

Annuities certain

Answer 25

are short term annuities that limit the amounts paid to a certain fixed period or until a certain fixed amount is liquidated.

Question 26

fixed period

Answer 26

annuitant selects the time period for payments and insurer determines how much each payment will be.

Question 27

fixed amount

Answer 27

annuitant selects howm uch each payment will be and insurer determines the time period of payments

Question 28

fixed annuity

Answer 28

• guaranteed minimum rate of interest
• insurer bares the investment risk
• premiums are deposited into the lifei nsurance company’s general account
• disadvantage to fixed annuities is that the purchasig power that they afford may be eroded over time due to inflation.

Question 29

General Account

Answer 29

consists mostly of conservative investments like bonds. These investments are secure anough to allow the insurance company to guarantee a specified rat3e of interest.

Question 30

guaranteed minimum

Answer 30

should interest rates drop below a guaranteed rate, the insurer is obligated to pay the guaranteed rate amount. ( in fixed annuities the insurer bears the investment risk.)

Question 31

what does the insurer do during the accumulation phase with the accumulated money?

Answer 31

insurer will invest and give the annuitant a guaranteed interest rate based on a minimum rate as specified in the annuity or the current interest rate whichever is higher.

Question 32

Equity Annuity

Answer 32

• Equity indexed annuities are fixed annuities that invest on a relaatively aggressive basis to aim for higher returns.
• has a guaranteed minimum interest rate.
• current interest rate is actually credited is often tied to an index like standard and poor’s 500
• insurance companies reserve the initial returns for themselves but pay the excess to the annuitant.
  
  • less risky than a variable annuity or mutual fund
    
    • expected to earn a higer interest rate than a fixed annuity

Question 33

Market value or market value adjusted

Answer 33

also known as a modified guaranteed. it is a single premium deferred annuity that allows the owner to lock in a guaranteed interest rate over a specified maturity period.

Question 34

uses of annuities

Answer 34

principal use of an annuity is to provide income for retirement; may be used for any accumulation of cash ohr simply to liquidate an estate.

Question 35

Uses of annuities

Answer 35

• Lump-sum settlements
• retirement income
• education funds
• long-term care needs

Question 36

Nebrska senior protection in annuity transaction act

Answer 36

set the standards and procedures for advice given by insurance producers and insurers with regards to annuities.provides protection to consumers of annuity products.