Annuities
How is a Market Value Adjustment different from an equity-indexed annuity?
A Market Value Adjustment is linked to fixed interest rate guarantees, while an equity-indexed annuity's interest rate is linked to an index.
What is the difference between a full survivor option and a two-thirds survivor option?
A full survivor option pays the same benefit amount to the survivor, while a two-thirds survivor option pays two-thirds of the original joint benefit.
What happens at the end of the Accumulation Period?
Accumulation units are converted to annuity units.
What is a Market Value Adjustment?
An adjustment attached to a deferred annuity that can cause the actual crediting rates to increase or decrease in response to market conditions.
What is a Period Certain Annuity?
An annuity income option that guarantees a definite minimum period of payments.
What is a Life with Period Certain Annuity?
An annuity option that provides income for life but guarantees a minimum period of payments.
What is a Joint Life and Survivor Option?
An annuity option that provides income to two people and continues to the survivor for life.
What is a Straight Life Annuity?
An annuity that pays a guaranteed income for the annuitant's lifetime.
What is a Variable Annuity?
An annuity that shifts investment risk to the contract owner.
What is a Single Premium Annuity?
An annuity where the entire premium is paid in one sum.
What is a Periodic Payment Annuity (Flexible Premium)?
An annuity where the owner makes multiple flexible premium payments.
What is an Immediate Annuity?
Annuity benefit paid at one interval from purchase date.
What is a Deferred Annuity?
Annuity payment postponed until specified period or age.
What is a Fixed Annuity?
Annuity with guaranteed rate of return and investment risk on insurer.
When is the annuity unit calculation made?
At the time of the initial payout.
What happens if the annuitant dies during the specified period in a Life with Period Certain Annuity?
Benefit payments continue to the beneficiary for the remainder of that period.
What is an endowment contract?
Contract that pays a benefit at a specified date or upon death.
What are Annuity Units?
Converted accumulation units for annuity payouts.
Who is eligible for a 403(b) Plan?
Employees of public schools, tax-exempt organizations, and certain ministers.
What is the Cash Refund Option?
Excess payment made to designated beneficiaries upon annuitant's death.
What licenses are required to sell variable annuities?
FINRA registration and state insurance license.
What is an Equity Indexed Annuity?
Fixed deferred annuity with interest based on external equities market index.
What is the Exclusion Ratio?
Fraction used to determine tax-exempt annuity income.
Where are variable annuity payments invested?
In an insurer's separate accounts instead of general accounts.
When does the market-value adjustment feature apply in an MVA annuity?
It applies only if the contract is surrendered before the contract period expires.
Do annuity units change for an annuitant?
No, they remain the same.
Can an annuity be exchanged for a life insurance policy?
No.
What type of investments are variable annuities based on?
Non-guaranteed equity investments, such as common stock.
What type of investments are used in Variable Annuities?
Non-guaranteed equity investments.
What are variable annuity benefits?
Payouts from a variable annuity.
What is the Accumulation Period?
Period when premiums are credited as accumulation units.
What type of annuity allows for flexible premium payments?
Periodic Payment Annuity (Flexible Premium).
How are variable annuity payments made?
Periodically to the annuitants, usually over their remaining years.
What is an Annuitant?
Person to whom an annuity is payable.
What is a life insurance policy?
Policy that pays a benefit upon the death of the insured.
What is a 403(b) Plan?
Retirement plan for certain employees.
What is the investment risk in a Variable Annuity?
Shifted to the contract owner.
What type of annuity allows for guaranteed income for life?
Straight Life Annuity.
What is a 1035 Contract Exchange?
Tax-free exchange of annuities, life insurance policies, or endowment contracts.
What is not realized in a 1035 Contract Exchange?
Taxable gain.
What is the advantage of a Single Premium Annuity?
The entire premium is paid upfront.
What is a policyholder?
The individual who holds an insurance policy.
What is the underlying stock investment?
The investment that determines the value of accumulation units.
What does the continuation of payment depend on?
The life of the annuitant.
What is Principal?
The original sum of money paid into an annuity.
What happens if one person in a Joint Life and Survivor Option dies?
The same income payments continue to the survivor for life.
What determines the dollar amount of variable annuity payments?
The value of the account invested, primarily in common stocks.
What happens to the payments in a Straight Life Annuity after the annuitant's lifetime?
They stop.
What is the purpose of a flexible premium in a Periodic Payment Annuity?
To allow the annuity owner to make multiple payments with flexibility in frequency and amount.
What do Accumulation Units represent?
Value of contributions less expenses.
