5) Annuities

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

403(b) PLan (TSA)

Joint Life

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

Income Payments from a deferred annuity begin sometime

After 1 year from the date of purchase

Five Factors to determine Premiums

Age; Gender ; Interest Rate; Amount and payment guarantee ; Loading

Accumulation Period

Also known as the pay-in-period of time in which the owner makes premiums into an annuity

When an annuity is written, whose life expectancy is taken into account?

Annuitant

Guaranteed Minimum Withdrawal Benefit

Annuitant can withdraw a maximum percentage of his/her investment anually.

if a beneficiary is NOT named for annuity benefits, to which entity will the benefit be paid?

Annuities estate

Which of the following products provides income for a specified period of years or life and protects a person against outliving his or her money?

Annuity

Which of the following products will protect an individual from outliving his or her money?

Annuity

Two types of refund life annuities;

Cash refund and installment refund

Annuity

Contract that provides income for a specified period of years, or for life.

Surrender Charge

Help compensate the company loss of the investment value due to an early surrender of a deferred annuity.

Which of the following is true regarding the annuity period?

It may last for the lifetime of the annuitant.

Funds are paid into the annuity.

What happens during the accumulation period?

Funds are paid out to the annuitant

What happens during the annuity period?

Main different between immediate and deferred annuities is

When the income payments begin

Fixed Period Installments

annuitant selects the time period for the benefits, and the insurer determines how much each payment will be, based on the value of the account and future earnings projections.

All of the following are true of an annuity owner Except

he owner must be the party to receive benefits

Pure Life Annuity

provides the highest monthly benefit, but there is no guarantee that the entire principal will be paid out

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

the cash value will be paid to the annuitants estate

Which of the following statements regarding the nature and purpose of life insurance and annuitites is true?

Life insurance is purchased for the risk of dying too soon

Shorter Life Expectancy = Higher Benefit;

Longer Life Expectancy = Lower Benefit

Provide retirement income

Main use of Annuities?

Beneficiary

Person who receives annuity assets if the annuitant dies during the accumulation period

Annuitant

Person who receives benefits or payments from the annuity, whose life expectancy is taken into consideration

Owner

Purchaser of the annuity contract but not necessarily the one who receives the benefits

Individual and group

Qualified Retirement Annuities

Annuities can be used to fund which of the following?

Retirement Plans

An immediate annuity is purchased with a

Single Premium

which two terms are associated directly with the way an annuity is funded?

Single payment or periodic payments

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary