Annuities Flashcards
Annuitant
An annuitant is an individual who is entitled to collect the regular payments of a pension or an annuity investment. The annuitant may be the contract holder or another person, such as a surviving spouse.
Accumulation Period
the segment of time in which contributions to an investment are made regularly, or premiums are paid on an insurance product, such as an annuity, intended to be used for retirement purposes.
It may include the time > premiums paid, but < payouts begin.
Straight Life Annuity
A straight life annuity, sometimes called a straight life policy, is a retirement income product that pays a benefit until death but forgoes any further beneficiary payments or a death benefit. Like all annuities, a straight life annuity provides a guaranteed income stream until the death of the annuity owner.
Immediate Annuities
In return for your lump sum, the insurance company promises to make regular payments to you (or to a payee you specify) for the chosen length of time – most commonly for the remainder of your life, however long that may be.
In most instances, immediate annuity payments are sent to you starting one month after you buy your annuity. When choosing an immediate annuity, you can choose how frequently you receive payments – often referred to as the “mode”.
Deferred Annuities
A deferred annuity is a contract with an insurance company that promises to pay the owner a regular income, or a lump sum, at some future date. Investors often use deferred annuities to supplement their other retirement income, such as Social Security.
Accumulation Units
a measurement of the value invested in a variable annuity account during the accumulation period
Annuity
The main reason for purchasing an annuity is to provide future economic security. An annuity is a mathematical concept that is quite simple in its most basic application. Start with a lump sum of money, then pay it out in equal installments over a period of time until the original fund is exhausted. That is the basic principle behind an annuity. An annuity is simply a vehicle for liquidating a sum of money. In practice, the concept is more complex. An important factor not mentioned above is interest.
The sum of money that has not yet been paid out is earning interest and that interest is also passed on to the income recipient (the annuitant).
Annuity
The main reason for purchasing an annuity is to provide future economic security. An annuity is a mathematical concept that is quite simple in its most basic application. Start with a lump sum of money, then pay it out in equal installments over a period of time until the original fund is exhausted. That is the basic principle behind an annuity. An annuity is simply a vehicle for liquidating a sum of money. In practice, the concept is more complex. An important factor not mentioned above is interest.
The sum of money that has not yet been paid out is earning interest and that interest is also passed on to the income recipient (the annuitant).
Anyone can provide an annuity. By knowing the original sum of money (the principal), the length of the payout period and the interest rate of the annuity earns, it is a fairly simple process to calculate the payment amount.
