Annuities Chapter 6 Flashcards
17 questions- 5%
Annuitization
Turning funds into future payments
Who is the annuitant?
The person whoses life the annuity payments are based on
What is the accumulation period?
The time when premiums are paid into the annuity
What is the annuity period?
It is the payout or distribution period.
What is annuitization?
The payout or annuity period
Are annuity cash values tax deferred?
Yes interest earning and growth are not taxable while they are while they accumulate
What are the 3 parties to an annuity?
The owner, annuitant, and the beneficiary
Who is the annuity owner?
The person who buys the contract
Who is the annuitant?
The person whose life the annuitant payment amount and duration is based on
Can the annuitant be a corporation?
No the annuitant must be a person
What is an immediate annuity?
An annuity purchase with a single sum of money to begin immediate payments
What is a deferred annuity?
It is a contract where annuitization is deferred until a future date
What is a single premium preferred annuity question?
An annuity purchased with one lump sum for future distribution
What is a flexible premium deferred annuity?
Premium payments can be made in any amount any frequency
Are a deferred annuity values nonforfitable?
Yes, Deferred annuity funds always belong to the owner they are not forfeitable even if the owner stops making payments
Can an annuity income payment option be changed or stopped?
No
What is the life contingency option for an annuity?
The payments last as long as the individual tint lives
Under straight life how long are payments made?
Payments are made for the individuals lifetime no matter how long it is?
No payments are made to anyone after the annuitant dies
Who received payments on a straight life policy once the annuitant dies?
No one the The contract ends
How long are payments under the life income with guaranteed minimum?
Pays the annuitant income for life no matter how long here she lives
How long are payments made under the joint and survivor life income option?
payble until the last survivor dies.
How long is the joint life annuity option payable ?
It is payable to 2 or more annuitants until the 1st one dies. Then no further payments
How do annuity certain options pay?
Is a pay for specified period. Once paid out, payments end even if the person still alive
What is a fixed period payout option?
All of the money is paid out for a fixed period of time. 10, 15, 20 yrs… remainder to beneficiary.
What is the Fixed Amount Payout Options?
Fixed about payable til all money paid out to beneficiary.
What is a fixed annuity?
Contract that guarantees both principle and specified rate of interest
No risk but may not keep up with inflation
What is fixed annuity accumulation ?
Can be immediate or deferred. Can be funded either with fixed premiums or flexible premiums
What account are premiums for fixed annuities deposited into?
The insurers general account
What are the 2 rates a fixed annuity typically has?
A guaranteed rate and a current rate
What are the 2 rates a fixed annuity typically has?
A guaranteed rate and a current rate
What is annuitized?
Paid out
What happens with a fixed annuity annuitization?
Funds are converted into a fixed periodic payment and distributed based on the payout option
Are variable annuities guaranteed?
No principal or interest rate guarantee. Funds go into insurers separate account
Who regulates producers who sell variable annuities ?
FINRA Financial industry regulatory authority
SEC regulates securities
Who regulates variable annuity funds?
The securities exchange commission (SEC)
What are equity indexed annuities?
Equity indexed annuities or fixed indexed annuities are tied to the performance of the stock market
When a producer delivers an annual contract what must also be delivered?
The byer’s guide
Are incompayments made for manuity tax deferred?
Only the cash value accumulates tax deferred. Interest is taxable
