Ch. 1 - Overview

Question 0

Annuitization

Answer 0

The process of converting all or a portion of the contract’s funds into a series of periodic income payments.

Question 1

What is an Annuity?

Answer 1

Financial contracts issued by insurance companies to provide a way to accumulate funds future and/or systematically distribute those funds over a period of time.

Question 2

Owner

Answer 2

The person who has all rights under the contract before the scheduled annuitization date. This person typically pays the premium deposits and has all rights and privileges under the contract.

Question 3

Annuitant

Answer 3

The person whose life an annuity’s income payments are based and to whom the payments will be made.

Question 4

Beneficiary

Answer 4

The person who will receive an annuity contract’s death benefit proceeds, should the owner or annuitant die before the contract’s values have been annuitized or before the contract’s start date.

Question 5

Owner-driven annuity

Answer 5

And annuity that pays the death benefit when the owner dies.

Question 6

Annuitant driven annuity

Answer 6

Annuity that pays the death benefit when the annuitant dies.

Question 7

Immediate annuity

Answer 7

A product that exclusively service to provide income distributions.

Question 8

Single premium immediate annuity (SPIA)

Answer 8

An immediate annuity that requires the payment of a single lump sum premium upon contract purchase.

Question 9

Fixed annuity

Answer 9

An annuity that provides for fixed levels of interest to be credited to the contract during the accumulation stage and a fixed, unchanging level of income to be paid upon the contracts annuitization.

Question 10

Indexed annuity (Equity indexed annuity)

Answer 10

An annuity which credits interest based on the performance of a market index such as the S & P 500.