RISK MANAGEMENT CH.10 ANNUTIES INDIVIDUAL RETIREMENT ACCOUNTS
What is an immediate annuity?
A fixed annuity hat can be purchased so taht the income payments start immediately
What is an equity indexed annuity?
A fixed deferred annuity that allows the annuity owner to aprticpate in the growh of thestock market
What is a spousal ira?
A married workeris an active participant in the employers retirement plan, but the other spouse is not an active participant
Taxation of individual annuities?
A nonqualified annuity is an annioty that does not mee the Internal Revenue Code requiring benefits
What is an annuity?
A periodic payment that continues for a fixed period or for the duration of a designateds life *Liquidiation of a sum on a fixed schedule*
What is an IRA rollover account?
A tax free distribution of cash orother part from one plan to another, fundsa re rolled over to a special account
What is a flexible premium annuitu?
Allows the annuity owner to vary the premium payments with no requirement that the owner must deposit a caertain amount
What is a flexible premoum annuity?
Allows the annuity owner to vary the premium payments with no requirement that the owner must deposit a specified amount each year
What is a traditional IRA?
An IRA that allows workers to take a tax deducion for partor all of their IRA contribution (Set up with a bank, life insurer)
What is an IRA
An Individual Retirement Accounts that allow workers with taxable compensation to make annual contributions to a retiremnent plan up to certain limits
Annuities for everyone?
Annuities are not for everyone you should purchase a variable annuity if you will need the funds before 59 1/2
What is a longevity insurance?
Because of increased life expectancy more peole are surviivng past 90; so to deal with the risk of exhausting financial asseys there is longevity insurance
What are forms of annuity settlement?
Cash can be withdrawn Life annuity Life annuity with guaranteed income Installment refund option Joint and survivoor annuity Inflation indexed annuity
What is an deferred annuity?
Defers teh income payment until some later date, provides income payments at some future date
What is a deferred annuity?
Defers the income payment until a a later date providing income payments
What are some annuity products?
Fixd Variable Equirt Index**
What are disadvantages of longevity
Heir will lose potential money Funds are locked up Risk of fortune is possible
What is a fixed period settlement option?
I want moeny until I die
What is a fixed amount>
I want this much this time
What aare some fees and expenses associated with variable annuiry?
Investment Manaager Administrative Charges Mortality and expense ratis Surrender charges
What is the difference between annuirt and life insurance?
Its the exact opposite, it provides protection for living too long and exhausting one's savings. Primary purpose is to provide income that cant be outlived
What are the benefits of longevity insurance?
Kicks in when they are likelyy t be exhausted Low cost Pruchased with inglaton
What are different ways to recieve a deferred annuity?
Lump Sum Single Premoum Deferred Flexible premium
What is an unliquidated principal?
Money from annuitants who die before recieiveing all of their moeny
What are some key elements of equity indexed annuity?
Participation Rates Maximum Cap Rates indexing MEthod Guaranteed Minimum Value
What is a straight life annuity?
Paying one perosn until that perosn dies. So, if you only live 2 years after an investment you only get 160, but if you live 30 years than you get 2.4 million
What is a installment refund option?
Payment of a life income to an anniuitant, and if they die before reciveing total income payment, the payment contrinues to the benficiary
What are some characteristics of life annuity?
Payments for life No guaranteed payments forfeiture possible Life income benefit
What is a variable annuity?
Pays a lifetime income varying on the common stock purposes
What is joint and survivor annuity?
Pays benefits based on the lives of 2+ annuitants (husband and wife) payments continue until they both deid
What is a fixed annuity?
Pays perodic income payments that are guaranteed and fixed in amount Credited with interest
Where do payments come from?
Premium payments Interest earnings Unliquidated princpal
What are some basic characteristiccs of a variable annuity?
Premiums are invested in a portfolio of common tocks that will increASE IN VALUE PRIOR TO RETIREMENT
What is an infaltion indexed annuity?
Provides oeriodic payments taht are ajusted for inflation
What is an inflation indexed annuity options?
Provides periodic payments that are adjusted for inflation
What is the payments of straight life annuity
Retur of principle Survivorship benefit
What are the payments of financial annuity
Return of principal Interest
What are some characteristics of financial annuity
Some payments guaranteed to annuitant or beneficiary Reverts to straight life at the end of guarnateed payment
Who is the annuitant?
The person who recieves the periodic payments`
What is annuity with guaranteed payments?
To avoid the insurance people keeping money, you get payments until you meed original payments. You designate a minum time period, or money will go to the spouse
What is a Roth IRA?
Type of IRA that provides substantial tax deductible but investment income is income tax free
What is a guaranteed beneit?
Variable annuities providea guaranteed benefit that protect the principal against loss due to market declines. If they die, the higher of the two will be paid
When is a full income tax deduction of traditional IRA contribution permitted?
Worker who is not an active participant Actively participating in theh employers retirement plan
What is the liquidation period?
he payout period following the accumulation when the funds are paid to the annuitant
