Annuities and Life Insurance Flashcards
Insurance contract designed to provide retirement income
Annuity
If the annuity is cancelled 7-10 years from issue
Surrender charges
Investors pay premiums to the insurance company that is invested into the company’s general account. Company has monthly payouts, company has investment risk
Fixed Annuity
The fixed payment an annuitant receives loses buying power over time due to inflation
Purchasing Power Risk
Credits interest to annuitants account, max and minimum guaranteed interest rate. Long surrender charge period
Index Annuity
Premium payments go into a separate account (like a MF), returns are not guaranteed, annuitant assumes risk
Variable Annuity
Purchased with a lump sum, payment is delayed until a later date selected by annuitant
Single Premium Deferred Annuity
allows investment over time, benefit payments delayed until a later date selected by annuitant
Periodic payment deferred annuity
purchased with lump sum, payout of benefits start within 60 days
Immediate Annuity
Insurance company contributes an extra 3-5% of the premium payment, but there are higher fees and expenses on the account
Bonus Annuities
Variable Annuity growth phase
Accumulation phase
Variable annuity payout phase
Annuity phase
Conservative projection of the performance of the separate account over the estimated life of the contract
AIR
Insurance company pays the annuitant for life. Payments stop at death. No beneficiary
Straight Life Annuity
Paid for life, guaranteed 10-20 year periodic payments to beneficiary if death occurs during that time
Life Annuity with Period Claim
Guarantees payments over two lifetimes
Joint Life with Last Survivor Annuity
Minimum number of payments are made upon retirement. Value leftover in account after death goes lump sum to beneficiary. Is a rider option added to other options
Unit Refund Option
Policy has a level premium, death benefit and cash value is guaranteed for life of policy
Whole Life Insurance
Policy has a fixed, scheduled premium. Guaranteed minimum death benefit. Rest of premium is put in separate account, cash value not guaranteed
Variable Life Insurance
Flexible premiums only invested in separate accounts and cash values are not guaranteed
Universal Variable Life Insurance
Contract exchange provision must be available for…
Two years
Cash Value is calculated…
Monthly
Death benefits are calculated…
Annually
Unit Values are calculated…
Daily
Maximum sales charge over the life of a contract
9%
Voting Rights of Variable Life Insurance
one vote per $100 of cash value in separate account
45 days after application or 10 after owner receives the policy
Free Look Period
Refund Provisions for…
Two years
Percent of cash value that must be available for a policy loan after 3 years
75%
Number of months contract exchange provision must be in place
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