Life: Annuities

Question 1

Life comtingency

Answer 1

Dependent on whether or not the insured is alive

Question 2

Qualified plan

Answer 2

A retirememt plan that meets the IRS guidelines for receiving favorable tax treatment

Question 3

Annuity

Answer 3

A contract that provides income for a specific period of years

Question 4

Motality tables

Answer 4

Indicate the number of individuals within a specific group, starting at a certain age, who are expected to be alive at a certain age

Question 5

Accumulation period

Answer 5

The period of time over which the owner makes paymentd (premiums) into an annuity

Question 6

Annuity period

Answer 6

Time during which the sum that has been accummulated during the accumulation period is converted into a stream of incoming payments to the annuitant

Also called annuitization period, liquidation period, or pay-out period

Question 7

Single premium

Answer 7

One-time lump-sum paymemt

Question 8

Period payments

Answer 8

Premiums are paid in installments over a period of time

Question 9

Level premium

Answer 9

The owner/annuitant pays a fixed installment

Question 10

Flexible premium

Answer 10

The amount and frequency of each installment varies

Question 11

Immediate annuity

Answer 11

Purchased with a single, lump-sum payment and provides income payments that start within one year from the date of purchase, typically within one month.

Question 12

Deferred annuity

Answer 12

An annuity in which the income payments begin sometime sfter one year from the date or purchase can be purchased with single or periodic premium

Question 13

Nonforfeiture law

Answer 13

Stipulates that a deferrered annuity must have a guaranteed surrender value that is available if the owner decides to surrender the annuity prior to annuitization. However, a 10% charge will be applied to all early withdrawals under 59 1/2

Question 14

Bail-out provison

Answer 14

Allows the contract holder to surrender the contract without charge, in the event that interest rates drop a specified amount within a specified time frame

Question 15

Fixed annuity

Answer 15

• Guaranteed minimum rate
• Income payments that do not vary from one payment to the next (level benefit payment amount)
• Guarantees specified dollar amount for each payment and the length of the period of payments as determined by the settlement option chosen by the annuitant

Question 16

General account

Answer 16

Comprise of mostly conservative investments like bonds. These investments are secure enough to allow the insurance company to guarantee a specify rate of interest, as well as assure the future income payments that the annuity will provide

Question 17

Pure life annuity payment

Answer 17

Payment until death. Provides the highest monthly benefits

Also known as straight life or life-only

Question 18

Life with guaranteed minimum

Answer 18

If annuitant dies, remainder will be refunded to beneficiary

Also called refund life

Question 19

Life with period (term) certain

Answer 19

Payouts are guaranteed for the lifetime of the annuitant and for a specified period of time for the beneficiary

Question 20

joint life annuity payment

Answer 20

A payout arrangement where two or more annuitants receive payment until the first death among the annuitants, and then payment stop

Question 21

Joint and survivor

Answer 21

Gurantees an income for two recipients neither can outlive. Commone for the survivor to receive a fraction of the payment after the death of the first

Question 22

Annuities certain

Answer 22

Short-term annuities that limit the amounts paid to a certain fixed perod or until a certain fixed amount is liquidated

Question 23

Fixed-period installments

Answer 23

The annuitant selects the time period for the benefits, and the imsurer determines how much each payment will be

Question 24

Fixed-amount installments

Answer 24

The annuitant selects how much each payment will be, and the insurer determines how long the benefits will be paid

Question 25

Indexed (or equity indexed) annuities

Answer 25

Fixed annuities that Invest on a relatively aggressive basis

Question 26

Market value, or market value adjusted annuity (MVA)

Answer 26

Single premium deferred annuity that allows the owner to lock in a guaranteed interested rate over a specified maturity period
Also know as modified guaranteed annuitiy