Chapter 11: Annuities Flashcards
Annuity
A periodic payment too begin at a specific or contingent date and to continue for a fixed period or for the duration of a designated life or lives.
Annuitant
The person whole life governs the duration of the benefit payments under a life annuity; usually also the person who receives periodic annuity payments.
Annuity Certain
An annuity with benefit payments that continue for definite period of time without being linked to the duration of a specified human life.
Life (whole life) annuity
An annuity whose benefit payments continue for the duration of a designated life.
Temporary life annuity
An annuity whose benefit payments continue until the earlier of the death of a designated person or the end of a specified period of time.
Joint (joint-life) annuity
An annuity with benefit payments that continue only until the first death among specified lives.
Joint-and-last-survivor annuity
An annuity with benefits payments that continue until the last death among specified lives.
Immediate annuity
An annuity with benefit payments that begin one payment interval (for example one month) after the date of purchase.
Deferred annuity
An annuity for which benefit payments begin more than one payment interval after the date of purchase.
Accumulation period
The period of time in a deferred annuity during which the purchase price is deposited with the insurer and accumulated at interest.
Liquidation period
The period of time during which the annuity benefit payments are made.
Installment refund annuity
An installment refund annuity makes payments for the life of the annuitant. If the annuitant dies before receiving monthly payments equal to the purchase price of the annuity, the annuity also pays installment benefits to the annuitant’s estate and/or beneficiary until the total equals the purchase price of the annuity.
Indexed annuities offer a minimum guaranteed interest rate.
True
Variable annuity Liquidation
During liquidation, a variable annuity pays a fixed number of annuity units of variable value in each payment period.
A charitable gift annuity
It is very important to evaluate the charity’s long-term solvency. If a charity goes bankrupt or faces financial difficulty, the annuitant is merely a general creditor.
