Ohio Life Insurance, Annuities

Annuity Income amount is based on?

- The amount of premium paid or cash value accumulated - The frequency of the payment - The interest rate - The annuitant's age and gender

Education Funds

Annuities can provide funds for educational purposes on a tax-deferred basis.

What are the two types of Refund Life Annuities?

Cash refund and installment refund

Life Contingency

Dependent upon whether or not the insured is alive.

IRS

Internal Revenue Service, a US government agency responsible for collecting of taxes, and enforcement of the Internal Revenue Code

Fixed Period installments

The 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. This option pays for a specified amount of time only, whether or not the annuitant is living.

Annuity

a contract that provides income for a specific specified period of years, or for life. protects a person against outliving his or her money, not life insurance, a vehicle for the accumulation of money and the liquidation of an estate, marketed by life insurance companies.

Annuity, Nonforfeiture

a deferred annuity has a guaranteed surrender value that is available if the owner decides to surrender the annuity prior to annuitization, e.g.100% of the premium paid, less any prior withdrawals and related surrender charges. However, a 10% penalty will be applied for early withdrawals, prior to age 59 1/2.

Natural Person

a human being.

Annuities, Life with Period Certain

a life contingency payout option. The annuity payments are guaranteed for the lifetime of the annuitant, and for a specified period of time for the beneficiary.

Single Premium

a lump sum payment is made into an annuity

Suitability

a requirement to determine if an insurance product addresses the consumers need and financial objectives , producers must make a reasonable effort to obtain relevant information from the consumer and evaluate the following factors: age, annual income, tax status, financial needs and timeline, investment objectives, liquidity needs and liquid net worth, existing assets, intended use of annuity, Financial experience, risk tolerance.

Market Value Adjusted Annuities, MVA

also known as a modified guaranteed annuity MGA, is a single premium deferred annuity that allows the owner to lock and a guaranteed interest rate over a specified maturity., anywhere between 3 to 10 years. penalties for premature surrenders depend upon current interest rates and time of the surrender.

Annuity, Pure Life payments

also known as life only or straight life, this payment ceases at the end of annuitant's death, no matter how soon in the annuitization period that occurs. This option provides the highest monthly benefit, Under this option, while the annuity payments are guaranteed for the lifetime of the annuitant, there is no guarantee that all the proceeds will be fully paid out.

Accumulation Period

also known as the pay-in period, the period of time during which the owner makes payments, premiums, to an annuity. Furthermore, it is the period of time during which the payments earn interest on a tax-deferred basis.

Deferred Annuity

annuity in which the income payments begin sometime after one year from the date of purchase. Can be funded with either a single lump sum or through periodic payments, periodic payments can vary from year to year. The longer the annuity is deferred, the more flexibility for payment of premiums it allows.

Immediate Annuity

annuity that is purchased with a single, lump sum payment and provides income payments that start within one year from the date of purchase usually as early as 1 month from the purchase date. commonly known as single premium immediate annuity, SPIA.

Single Life Annuities

characterized by having only one annuitant. contributions can be made with a single premium or on a periodic premium basis with subsequent values accumulating until the contract is annuitized.

Liquidation Of An Estate

converting a person's net worth into a cash flow.

Multiple Life Annuities

cover 2 or more lives. Two of the most common are Joint Life and Joint and Survivor.

General Account Assets

fixed annuity premiums are deposited into the life insurance companies general account, comprised mostly of conservative Investments like bonds, these Investments are secure enough to allow the insurance company to guarantee a specified rate of interest, as well as assure the future income payments that the annuity will provide.

Annuities may be classified as ___________ or _________ based on what?

fixed or variable, how the premium payments are invested.

Anuity, Bail-Out Provision

found in some annuity contracts, allows the contract holder, if interest rates drop a specified amount within a specified time frame, to surrender the contract without a charge.

Surrender Charges

helps compensate the company for loss of the investment value due to an early surrender of the deferred annuity. Is levied against the cash value, and is generally a percentage that reduces over time. at surrender, the owner gets the premium, plus interest the value of the annuity, minus the surrender charge.

Lump-Sum Settlements

ideal for someone who comes into a large sum of money, such as inheritance, Lottery, Award of damages from a lawsuit, proceeds from a sale of business, or lump sum distribution from a qualified pension plan. In this case, a person may purchase a Single Premium Immediatemmediate Annuity, which will convert the lump sum into a series of periodic payments, providing a stream of income for the annuitants.

Life with Guaranteed Minimum Settlement Option guarantees what?

if the annuity dies before the principal amount has been paid out, the remainder of the principal amount will be refunded to the beneficiary. Also called refund life. It guarantees that the entire principal amount will be paid out.

Interest Rate Guarantees, minimum vs. current

in fixed annuities, the insurer bears the investment risk. Future interest rates actually paid by an insurer are based on the performance of the insurance company. However, the rate may not drop below it policies Guaranteed Minimum, typically 3%. Should interest rates drop below this guaranteed rate, the insurer is obligated to pay the Guaranteed Rate amount.

Annuities, Joint and Survivor

is a payment arrangement modification of the life income option, it guarantees an income for two recipients that neither can outlive. it is possible for the surviving recipients to receive payments in the same amount as the first recipient, most contract say that they're surviving recipients will receive a reduced payment after the first recipient dies. Most commonly this option is written as joint and half Survivor or joint and 2/3 Survivor, in which the surviving beneficiary receives half or two-thirds of what was received when both beneficiaries were alive. This option is commonly selected by a couple in retirement. As with the life income option there is no guarantee that all the proceeds will be paid out if both beneficiaries died shortly after the installments begin.

Annuities, Joint Life

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

Periodic Payment Annuities, what are the two kinds of premiums?

level premium or flexible premium

Are Annuities Life Insurance?

no, they do not pay a face amount of on the death of the annuitant.

Periodic Payments

premiums are paid in installments over a period of time

Uses of Annuities

primary uses for income for retirement, and annuity may be used for any accumulation of cash or simply to liquidate an estate. because of the various uses of annuities, agent should always assess how well the recommended product will meet the applicants need and resources, the suitability of a product.

Owner

purchaser of annuity contract, but not necessarily the one who receives the benefits. The owner of the annuity has all of the rights, such as naming the beneficiary and surrendering the annuity. The owner may be a corporation, trust, or other legal entity.

Suitability

requirement to determine if an insurance product is appropriate for a particular customer.

Qualified Plan

retirement plan that meets the IRS guidelines for receiving favorable tax treatment.

Qualified Retirement Plans

retirement plans that meet certain statutory requirements and that allow participants to save for retirement meeting the IRS guidelines to receive favorable tax treatment. They can be individual, such as individual retirement accounts IRAs or group, such as tax-sheltered annuity TSA, or profit sharing pension plans.

Annuities Certain, Types

short term annuities that limit the amounts paid to a certain fixed period or until a certain fixed amount is liquidated.

Annuity Payment Options

specifys how annuity funds are to be paid out. They're very similar to the settlement options used in life insurance that determine how the policy proceeds are distributed to the beneficiaries.

Annuity, Waiver is for what?

surrender charges, if the annuitant is confined to a long-term care facility for at least 30 days.

Flexible Premium is paid by?

the amount and frequency of each installment varies.

Level Premium is paid by?

the annuitant / owner pays a fixed installment.

Annuity Period

the annuity period, also known as annuitization period, liquidation period, or payout period, is the time during which the sum that has been accumulated during the accumulation period is converted into a stream of income payments to the annuitants. The annuity period may last for the lifetime of the annuitant or for a specified period, which could be longer or shorter.

What if an annuitant dies during the accumulation period?

the insurer is obligated to return to the beneficiary either the cash value or the total premiums paid, whichever is greater. If a beneficiary is not named, the benefit will be paid to the annuitants estate.

Annuitant

the person who receives benefits or payments from the annuity,

Annuitization Date

the time when the annuity benefit payouts begin, trigger for benefits.

Equity-Indexed Annuities

type of fixed annuity that offer the potential for higher credited rates of return than their traditional counterparts but also guarantee the owners principal. There is a minimum guaranteed rate(3-4%) so a certain rate of growth is guaranteed. Designed to bridge the gap between fixed and variable annuities. less risky than a variable annuity or mutual fund but are expected to earn a higher interest rate than a fixed annuity.

Annuities, Cash Refund

when the annuitant dies, the beneficiary receives a lump sum refund of the principal minus benefit payments already made to the annuitant. This option does not guarantee to pay any interest.

Annuity, Installment Refund

when the annuitant dies, the beneficiary will continue to receive guaranteed installments until the entire principal amount has been paid out.

Deferred

withheld or postponed until a specified time or event in the future.

Fixed Annuity, what are the features?

~ guaranteed minimum rate of interest to be credited to the purchase payments, ~ income, annuity, payments that do not vary from one payment to the next time ~ 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 annuitants.

How can annuities be classified?

~ how premiums are paid into the annuity, ~ how premiums are invested, ~ when and how benefits are paid out.