Chapter 6: Annuities
Annuity Certain
Limits the amount paid to a certain period of time or amount til runs out
Reasons for Annuities
Lum-Sum Settlement, Retirement and College Fund
Suitability for Annuity
Age, Annual Income, Financial and tax status, Investment options, Intended use of annuity, Financial experience and Risk tolerance
Annuity Income is Based Upon
Amount of Premium, Frequency of payments, Interest rates, annuitant's age and gender
Waiver for Annuity Surrender
Charges will be waived if the annuitant is confirmed to a Long Term Care Facility for at least 30 days.
Annuity
Contract that provides income for a specific amount of time; payments stop upon death
Variable Annuities
Does not guarantee interest rate, the value will fluctuate unit pay out
Annuity Investments
Fixed, Variable and Market Value
Fixed Annuity
Guaranteed minimum rate of interest, payments do not vary, guarantees specific dollar amount for each payment
Nonforfeiture
Guaranteed surrender value
Bail-Out Provision
In the interest rates drop a specific amount within time frame, can surrender with out charge
Indexed (or equity indexed) Annuities
Invest on aggressive basis to aim for high return, less risk than variable
Annuity Payment Options
Life Contingency, Single life, Multiple Life, Joint Life, Annuity Certian
Market Value Adjusted
Modified guarateed, allows the owner to lock in interest rate over a specific maturity period, 3-10 years.
Joint Life
Payout to two or more annuitants unit first dies
Accumulation Period (Pay-In Period)
Period of time over which the annuitant makes payments
Beneficiary
Person receives annuity assests if annuitant dies
Annuitant
Person who receives benefits from annuity
Types of Annuities
Premium Payment, Immediate, Deferred
Life with Guaranteed Minimum
Principal is paid out the remainder payed to beneficiary
Owner
Purchaser of annuity
Joint Survivor
Survivor receives reduce payment
Annuity Period
Time when the annuity converts into a steam of income payments to the annuitant
Life Contingency
Will pay a specific amount for the remainder of the annuitant's life
