The Annuity Period (Pay-Out/Liquidation)

Question 1

The Annuity Period (Pay-Out/Liquidation)

Answer 1

The annuitization period begins once the policyowner elects to convert a deferred annuity into an income benefit payment.

Question 2

Lump Sum

Answer 2

The annuitant has the option of cashing out the annuity in a lump sum instead of electing to receive a stream of income. There could be tax consequences and tax penalties depending upon when this occurs.

Question 3

Annuitization

Answer 3

The election to receive payments from the annuity for life or for a specified period depending on the settlement option selected.

Question 4

Annuity Payments

Answer 4

Once a contract is annuitized, the insurance company takes ownership of funds in the account. In return, the annuitant is entitled to a guaranteed income stream based on the terms of annuitization. Depending on the option chosen, the annuitant may be able to name a beneficiary to receive any remaining benefits that are available upon the annuitant’s death

Question 5

Life Income (Pure or Straight Life)

Answer 5

Annuity is payable for as long as the annuitant lives, and upon death all payments cease. This option provides the highest monthly income compared to any of the other options.

Question 6

Life Income Period Certain –

Answer 6

Annuity is payable for life, or for a specified period of time, whichever is longer. If the annuitant lives beyond the stated period, benefits continue for life of the annuitant. If the annuitant dies prior to the end of the period certain, a beneficiary receives the balance of the payments for the remaining time period.

Question 7

Life Income with Refund (Installment or Cash Refund)

Answer 7

Annuity is payable for the lifetime of annuitant. Upon death, if an annuitant has not received an amount equal to the total of all payments made into the annuity (not the growth), the balance is refunded to the beneficiary as a lump sum, or cash refund, or in installments, sometimes referred to as the installment refund.

Question 8

Life Income Joint & Survivor

Answer 8

Annuity is payable to 2 annuitants (in one check) while both are living. Upon the death of the first annuitant, survivor benefits continue, either paying the full amount or reduced to 2/3 or 1/2 for the survivor’s income until the survivor dies.

Question 9

Joint Life

Answer 9

– Annuity is payable to 2 or more named annuitants while both are living. Upon the death of the first annuitant, the benefits stop.

Question 10

Annuity Certain

Answer 10

Annuity benefit payments are received for a specified period of time or a specified amount of periodic income. If the annuitant dies with time remaining on the period certain, or a balance is left in the account, the named beneficiary receives the balance of the payments.

An annuity guaranteed to pay out for a specific number of years (such as a typical, state lottery prize) is called a fixed period.
If the periodic amount is specified, but not the number of payments needed to pay out, or liquidate, the sum in question, then the annuity certain is called a fixed amount.