Annuities-8

Question 1

Annuities

Answer 1

Are ways of providing a stream of income for a guaranteed period of time

Question 2

Contract owner

Answer 2

Individual who purchases the annuity pays the premiums and has rights of ownership

Question 3

Annuitant

Answer 3

The income benefits distributed at regular intervals during the liquidation phase of an annuity contract are payed to this person

Question 4

Beneficiary

Answer 4

Is the person who receives survivor benefits upon the annuitants death

Question 5

Accumulation period

Answer 5

The pay-in period, where the contract owner makes the purchase payments

Question 6

Annuity period

Answer 6

Liquidation period

When the money that has accrued during the accumulation period is paid out in the form of payments to the annuitant

Question 7

Immediate annuities

Answer 7

Purchased with a single lump sum payment, and will start providing income payments within the first year

Question 8

Deferred annuities

Answer 8

Will start providing income payments after the first year

Question 9

Single premium deferred annuity

Answer 9

Deferred annuities are usually purchased with a single lump sum payment

Question 10

Flexible premium deferred annuity

Answer 10

Deferred annuities are usually purchased with monthly payments

Question 11

Payout options

Answer 11

• straight life income payout option
• fixed amount option
• cash refund payout option
• installment refund payout option
• Life with period certain payout option

Question 12

Straight life income payout option

Answer 12

Pays the annuitant a guaranteed income for the annuitants lifetime

Question 13

Fixed amount option

Answer 13

The annuitant receives a fixed payment until the contract value is exhausted

Question 14

Cash refund payout option

Answer 14

Pays a guaranteed income to the annuitant for life

Question 15

Installment refund payout option

Answer 15

Pays a guaranteed income to the annuitant for life

Question 16

Life with period certain payout option

Answer 16

Is designed to pay the annuitant guaranteed payments for the life of the annuitant or for a specific period of time for the beneficiary

Question 17

Joint and two thirds survivor

Answer 17

Survivor will have payments reduced to two thirds of the original payment

Question 18

Joint and one half survivor

Answer 18

Survivor will have payments reduced to one half of the original payment

Question 19

Fixed annuity

Answer 19

Provide a guaranteed rate of return

Question 20

Variable annuity

Answer 20

Does not provide a guaranteed rate of return because of the investment risk

Question 21

Accumulation units

Answer 21

The value of the accumulation units varies depending on the value of the stock investment that is a part of a variable annuity

Question 22

Annuity units

Answer 22

At the time the variable annuity is to be paid out to the annuitant

Question 23

Equity indexed annuities

Answer 23

Type of fixed annuity that offers the potential for a higher return than a standard fixed annuity

Question 24

Single life annuities

Answer 24

Characterized by having only one annuitant

Question 25

Tax sheltered annuities

Answer 25

Limited exclusively for employees of religious, charity, or educational groups

Question 26

Income tax treatment of annuity benefits

Answer 26

Annuity benefit payments consist of principal and interest

Question 27

Partial withdrawal

Answer 27

Is taken from an annuity before age 59 half the withdrawal is considered 100% interest

Question 28

1035 exchange

Answer 28

If an annuity is exchanged for another annuity a gain is not realized

Question 29

Qualified annuity plans

Answer 29

Is a tax deferred arrangement established by an employer to provide retirement benefits for employees