Chapter 17 Flashcards
Promised a series of periodic payments
Annuitant
Any regular stream if periodic payments
Annuity
After the first annuitant dies, this person takes over the periodic stream of payments
Successor beneficiary
In life insurance this means that those people with a greater than average likelihood of premature death try to purchase life insurance at regular rates
Adverse selection
The risk that someone might run out of money to live on if they live far beyond the normal life expectancy
Longevity risk
In negligence cases, instead of the defendant paying a lump sum to a plaintiff, the defendant (using the services of an insurer) promises a series of annuity payments to the injured party
Structured settlement
Begins to pay benefits as soon as the premiums are paid in full
Immediate annuity
If a person pays for an annuity and benefits do not begin at once
Deferred annuity
Period at which the annuitant is paying premiums to the insurers
Accumulation period
Period during which the insurer make payments to the annuitant
Liquidation period
The difference between the actual investment warnings and the minimum guaranteed earnings
Excess interest
Deduction of expense charge from each premium payment
Front-end load
Surrender charges
Back-end load
The basic annuity promise is for the insurer to agree to continue payments only so long as the annuitants is alive
Pure/Straight-life annuity
Calls for payments for five years of until the annuitant dies
Five years certain
If Charles lives for 32 years after the first payment, payments continue for the 32 year period
Period-certain life-income annuities
If an annuitant dies before having received a total amount of annuity payments equal to the premium paid, a second beneficiary will receive the difference in cash at the time of the annuitants death
Cash-refund annuity
Guarantees that if an annuitant dies before having received annuity payments equal to the premium paid, the annuity payments will continue to a successor beneficiary until the insurer pays out a total amount of dollars equal to the premium
Installment refund annuity
Designed to overcome problems with inflation
Variable annuity
