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25 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Primary function of an annuity |
To provide a stream of income for old age or retirement |
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Annuitant |
The beneficiary of an annuity |
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Major reason people buy annuities |
Interest accumulates and is tax deferred until taken out |
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Accumulation Period |
The period of time when interest builds |
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How money is distributed during the accumulation period |
The person receives a single lump sum payment or is paid over time with periodic payments |
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Annuity Period |
Time period that the annuitant is receiving income |
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The way insurer's determine how much money will be paid in an annuity |
Mortality Factor of the annuitant Interest earned over the payout period Value of the "accumulation account" Expenses or load of the insurer |
MIVE |
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Life Annuity Risks |
Annuitant takes the risk that they'll die before getting all of the deposits and interest back |
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Annuity |
Liquidates a fund while living |
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Joint & Survivor Annuity Benefits |
Pays benefits while both the annuitants are alive |
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Joint Life Annuity Payments |
When the first annuitant dies, all payments stop |
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Immediate Annuity |
An annuity contract that is purchased with a single lump-sum payment and in exchange, pays a guaranteed income that starts almost immediately |
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Deferred Annuity |
A type of annuity contract that delays payments of income until the person elects to receive them |
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Fixed Annuity |
The insurer makes fixed dollar payments to the annuitant until they die. The insurance company guarantees both earnings and principal |
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Variable Annuity |
An insurance contract usually invested in the stock market products which, over the long run offer a higher rate of return than a fixed annuity |
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Straight Life Annuity Payout Option |
Annuitant is paid until they die, then payments stop completely |
Single life or Pure life annuity |
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Life Annuity with Period Certain Payments |
If policy holder dies before the end of the period, beneficiary will receive remainder of the payments for the guaranteed period |
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Life Annuity with Refund |
Only annuity that guarantees the principal |
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Joint & Survivor Annuity Payout |
Payout is based on the average ages of the annuitants |
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Non-Forfeiture Provision |
Guarantees that the contract owner will never loose cash in the account during the accumulation period |
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Death Benefits |
If death occurs during the accumulation period, the beneficiary will receive money |
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Annuity Certain |
Pay a fixed amount of money over a fixed period of time until the fixed period ends |
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Suitability of Annuity Transactions |
1. Consumers must be Fully informed of the risk 2. Agent must explain the Difference between fixed and variable products 3. Agent must explain the Risk of replacement 4. Agent must know the Needs of the consumer and Explain the fees and tax implications regarding the transaction |
EN FDR |
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The only way to outlive an annuity |
By having a Fixed Annuity because it doesn't take inflation into consideration |
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Straight Life Annuity Payout |
Pays the highest, but also the riskiest to the annuitant |
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