Annuities Flashcards
What are the rights of variable annuity investors?
They can vote on policy changes (like mutual funds)
Variable A’s are regulated by which act?
Act of 1940 (like mutual funds)
VA’s passed where at death?
Designated beneficiary
When do VA’s produce income?
Only upon withdrawal
Which has greatest effect on value of annuity units?
Securities fluctuations in separate account
What do VA’s guarantee?
- Payments for life
- Expenses wont increase
How are separate accounts similar to mutual funds?
- Diversified, professionaly managed
- Voting rights
What is annuitization?
Converting an annuity investment into a series of payments
What is assumed interest rate? (AIR)
The rate selected by the insurance company to determine value of contract
What would decline the value ?
If performance is lower that IR
What is deferred annuity?
Delays distributions until the owner chooses
What is accumulation unit?
Determines interest in separate account - during accumulation stage
Separate account?
Holds funds paid by variable annuity guys
Assumed Interest Rate?
Basis of projected annuity payments
What is an unqualified annuity?
When client has paid with after tax dollars
What is the cost basis equal to?
Total contributions
Investor contributed 100k to a variable annuity, now it’s worth 150k. What is taxable upon withdrawal?
50k
What does tax deferred mean?
Not taxed until withdrawn
Which VA contract pays most monthly?
Life-only annuity
