Exam 3 Content Flashcards
Two biggest risks of security on retirement income
Superannuation, inflation
Superannuation
Outliving one’s money
Annual Reset (Ratcheting) Method
Index value measured once per year on contract anniversary date, gains are locked in for the full year
Annuitant
Individual whose life the contract is dependent
Cash refund annuity
Guarantees annuitant or family will receive premium payments used, balance is paid in cash
High Watermark Method
Measures index multiple times throughout contract term. Interest credited based on largest gain at starting point to any high along the way
Immediate Annuity
Instrument where contract owner trades lump sum for a steady stream of income that begins immediately
Point-to-Point Indexing Approach
Compares values at beginning and end of a specified term (1-5 years)
Advantages of annual reset method
Safety and annual growth locking
Advantages of high watermark method
Allows you to take advantage of market peaks over time
Installment Refund Annuity
Special type of term certain annuity whereby insurer promises to continue payments after annuitant has died up to value of what was purchased
Joint and Survivor Annuity
Promises to make payments over the lives of two or more annuitants
Longevity Insurance
Deferred annuity that will not begin to make payments until person reaches an “advanced” age
Single Life Annuity
Provides steady income to the annuitant for life
Single Premium Annuity
Purchased with a single lump sum
Requirements for Qualified Longevity Annuity Contracts (QLACs) (3)
- Max $210,000 used to purchase
- Purchased in an IRA or other contribution plan
- Must be annuitized no later than 85 yr old
