Chapter 6: Annuities

Annuity Certain

Limits the amount paid to a certain period of time or amount til runs out

Reasons for Annuities

Lum-Sum Settlement, Retirement and College Fund

Suitability for Annuity

Age, Annual Income, Financial and tax status, Investment options, Intended use of annuity, Financial experience and Risk tolerance

Annuity Income is Based Upon

Amount of Premium, Frequency of payments, Interest rates, annuitant's age and gender

Waiver for Annuity Surrender

Charges will be waived if the annuitant is confirmed to a Long Term Care Facility for at least 30 days.

Annuity

Contract that provides income for a specific amount of time; payments stop upon death

Variable Annuities

Does not guarantee interest rate, the value will fluctuate unit pay out

Annuity Investments

Fixed, Variable and Market Value

Fixed Annuity

Guaranteed minimum rate of interest, payments do not vary, guarantees specific dollar amount for each payment

Nonforfeiture

Guaranteed surrender value

Bail-Out Provision

In the interest rates drop a specific amount within time frame, can surrender with out charge

Indexed (or equity indexed) Annuities

Invest on aggressive basis to aim for high return, less risk than variable

Annuity Payment Options

Life Contingency, Single life, Multiple Life, Joint Life, Annuity Certian

Market Value Adjusted

Modified guarateed, allows the owner to lock in interest rate over a specific maturity period, 3-10 years.

Joint Life

Payout to two or more annuitants unit first dies

Accumulation Period (Pay-In Period)

Period of time over which the annuitant makes payments

Beneficiary

Person receives annuity assests if annuitant dies

Annuitant

Person who receives benefits from annuity

Types of Annuities

Premium Payment, Immediate, Deferred

Life with Guaranteed Minimum

Principal is paid out the remainder payed to beneficiary

Owner

Purchaser of annuity

Joint Survivor

Survivor receives reduce payment

Annuity Period

Time when the annuity converts into a steam of income payments to the annuitant

Life Contingency

Will pay a specific amount for the remainder of the annuitant's life