Annuities: Types and Features
Systematically liquidates both principal and interest
An immediate annuity contract that pays out both principal and interest
Level death benefit
An immediate annuity contract with a fixed death benefit
Fixed annuities
Annuities with guaranteed interest rates and fixed monthly benefit pay out amounts
Equity indexed annuities
Annuities with investments tied to an index such as the S&P 500
Cash Refund Annuity
Annuity settlement that pays a lump sum death benefit equal to the premiums paid
Period Certain Annuity
Annuity settlement that pays a lump sum payment based on the starting fund amount minus what has been paid
Installment Refund Annuity
Annuity settlement that pays a lump sum payment equal to the fund amount on the annuitization date
Life Annuity
Annuity settlement that stops when the annuitant dies
Flexible Premium
Annuity that allows variable payment amounts
Refund Life Annuity
Annuity that pays a lump sum refund to the beneficiary if the annuitant dies after the annuity income begins
Refund annuity
Annuity that pays a lump sum refund to the beneficiary if the annuitant dies after the annuity income begins
Continuous Annuity
Annuity that pays a specified number of years whether the annuitant is alive or dead
Life Annuity with Period Certain
Annuity that pays a specified number of years whether the annuitant is alive or dead
Life with Period Certain Annuity
Annuity that pays a specified number of years whether the annuitant is alive or dead
Straight Life Annuity
Annuity that pays a specified number of years whether the annuitant is alive or dead
Joint Life Annuity
Annuity that provides income for as long as either member of a couple lives
Joint and Survivor Annuity
Annuity that provides income for as long as either member of a couple lives
Deferred
Annuity that starts paying at a later date
Deferred Annuity
Annuity that starts paying at a later date
Level premium deferred annuity
Annuity that starts paying at a later date with equal payments over time
Immediate
Annuity that starts paying immediately
Immediate annuity
Annuity that starts paying immediately after purchase
Single premium immediate annuity
Annuity that starts paying one month after purchase with a single large payment
Variable
Annuity with variable investment options
Variable annuity
Annuity with variable investment options and no guaranteed minimum rate of return
Guaranteed mortality and administrative costs
Factors that influence the benefit payment amount on a single premium deferred annuity
The amount contributed during the accumulation period
Factors that influence the benefit payment amount on a single premium deferred annuity
The annuitant's age when the annuity was purchased
Factors that influence the benefit payment amount on a single premium deferred annuity
The benefit option chosen
Factors that influence the benefit payment amount on a single premium deferred annuity
Surrender charges
Fees for terminating an annuity contract early
Nonqualified individual fixed annuity
Fixed annuity purchased outside of a qualified retirement plan
Cash value guarantees
Guaranteed minimum value of an annuity
Single lump-sum payment
Payment method for purchasing annuities with a single large payment
Level payments
Payment method for purchasing annuities with equal payments over time
Flexible payments
Payment method for purchasing annuities with variable payment amounts
Accumulation period
Period during which annuity funds are built up
Annuity period
Period during which annuity payments are made
Benefit period
Period during which annuity payments are received
Annuitization period
Period when annuity payments begin
10% penalty and tax on interest earned
Tax consequences of surrendering a nonqualified individual fixed annuity prior to age 59 1/2
10% penalty and tax on premium paid
Tax consequences of surrendering a nonqualified individual fixed annuity prior to age 59 1/2
No penalty and tax on interest and premium paid
Tax consequences of surrendering a nonqualified individual fixed annuity prior to age 59 1/2
No penalty and tax on interest earned
Tax consequences of surrendering a nonqualified individual fixed annuity prior to age 59 1/2
The annuitant is the contract owner
The annuitant in a deferred annuity contract is the owner
The beneficiary is named by the annuitant
The annuitant names the beneficiary in a deferred annuity contract
Premiums are paid by the annuitant
The annuitant pays the premiums in a deferred annuity contract
Annuity payments are based on the annuitant's life expectancy
The annuitant's life expectancy determines the payment amounts in a deferred annuity contract
Current Interest Rate
The current rate of return a fixed annuity earns
Difference between the Current and Guaranteed Interest Rate
The difference between the current and guaranteed rate of return a fixed annuity earns
Guaranteed Interest Rate
The minimum rate of return a fixed annuity earns
Minimum Interest Rate
The minimum rate of return a fixed annuity earns
Annuitant
The person on whose life the annuity income is based
Owner
The person who purchases the annuity
Beneficiary
The person who receives the annuity benefits if the annuitant dies
Insured
The person whose life is insured in the annuity
