fixed and variable annuities
fixed annuity interest rate
guaranteed by insurance company
three characteristics of variable annuities
-Underlying investment: the payments that the annuitant invests into the variable annuity are invested in the insurers separate account is not part of the insurance companies own investment portfolio, it is not subject to the restrictions that are applicable to the insurers own general account -Interest rate: issuing insurance company does not guarantee a minimum interest rate - Licence requirements: a variable annuity is considered a security and is regulated by the securities exchange commission (SEC) in addition to state insurance regulations. An agent selling variable annuities must hold a securities licence in addition to a life insurance licence. agents or companies that sell variable annuities must be properly registered with FINRA
a fixed annuity provides
-guaranteed minimum rate of interest to be credited to the purchase payment or payments; - income(annuity) payments that do not vary from one payment to the next; - the insurance company guarantees the specified dollar amount for each payment and the length of the period of payments as determined by the settlement option chosen by the annuitant
fixed annuity underlying investment
general account (safe, conservative)
fixed annuity expenses
guaranteed
fixed annuity licence needed
life insurance
variable annuity licence needed
life insurance plus securities
variable annuity interest rate
no guarantee
variable annuity underlying investment
separate account(equities, no guarantee)
disadvantage of fixed annuity
the purchasing power that they afford may be eroded over time due to inflation
fixed annuity income payment
guaranteed
fixed annuity mortality
guaranteed
variable annuity expenses
guaranteed
variable annuity income payment
guaranteed
variable annuity mortality
guaranteed