Unit 9 Flashcards
To change an annuity contract from the accumulation (pay-in) stage to the distribution (pay-out) stage
Annuitize
An accounting method used to assess a corporations inventory in which it is assumed that the last goods acquired are the first to be sold. The method is used to determine cost basis for tax purposes. The IRS designates this as an order in which sales or withdrawals from an investment are made.
Last in, first out (LIFO)
An annuity payout option that guarantees that all of the money in the contract (at minimum) at the time of annuitization is distributed to the annuitant/beneficiary
Unit refund annuity
An annuity payout option that covers two or more people, with annuity payments continuing as long as one of the annuitants remain alive
Joint life with las survivor
An annuity payout option that guarantees the annuitant a monthly check for the longer of a certain period or the annuitants death. If the annuitant died before the period expires, the payments go to the annuitants named beneficiary for the duration of the certain period
Life annuity with period certain
An annuity payout option that pays over the annuitants lifetime
Life annuity/straight life
Purchased with a lump sum, and the payout of benefits usually commenced within 60 days
Immediate annuity
Allows investments over time. Benefit payments for this type of annuity are always deferred until a later date selected by annuitant
Periodic payment deferred annuity
- The net rate of investment return that must be credited to a variable life insurance policy to ensure that at all times the variable death benefit equals the amount of the death benefit. Forms the basis for projecting payments but it is not guaranteed.
- The rate that a variable annuity separate account must earn to keep annuity payments level. If the account earns more, the next payment will increase. If it earns less, the next payment will decrease
Assumed interest rate (AIR)
Has a fixed scheduled premium but differs from whole life insurance in that the premiums paid are split. Part of the premium is placed in the general assets of the insurance company
Cash value is not guaranteed
Variable life
Protection for a specified period. Provided pure protection and is the least expensive for of life insurance
Does not build cash values
Term life
Designed to last until at least age 100 or the death of the insured, whichever occurs first.
Accrue cash value that may be borrowed for living needs
Not a security
Whole life
The account that holds funds paid by variable contracts issued by insurance companies. The funds are kept separate from the insurers general account
Separate account
An insurance contract used to fund retirement. Cash values vary with the performance of a portfolio of investments. An insurance and securities license is required to present variable contracts
Variable annuity
An insurance contact in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal
Fixed annuity
