annuities Flashcards
solidify terminology
annuities
what is an annuity?
protect against the risk of living too long.
the fear of outliving your retirement plan
structure or design of an annuity
what is an immediate annuity
purchased with a single lump sum payment and will provide income payments within the first year.
also know as a single premium immediate annuity (SPIA)
structure and design of an annuity
what is a deffered annuity
provide income payments after the first year. can be purchased with a lump sum or monthly payments. both known as “single premium deferred annuity” (SPDA) or “ flexible premium deffered annuity” (FPDA).
pay out for annuitant
straight life income payout option (annuity)
pays the annuitant a guaranteed income for the annuitant’s lifetime or till death
pay out for annuitant
cash refund payout option (annuity)
pays a guaranteed income for the annuitants for life or till death, any remainding cash value is given to the beneficiary
not to be confused with “installment refund payout” out which is fixed
pay out for annuitant
installment refund payout option (annuity)
pays a guaranteed income to the annuitant for life. if the annuitant dies the same fixed amount are paid out to its benefeciary.
not to be confused with “cash refund Payout” which is a lump sum
pay out for annuitant
who is the owner of an annuity
the annuitant, benefeciary or neither.
neither in a sense of collateral
pay out for annuitant
life with period certain payout option (annuity)
id designed to pay the annuitant guaranteed paments fot the life of the annuitant or for a specific perid of time for tthe beneficiary.
pay out for annuitant
joint and full survivorship payout option (annuity)
pays out the annuity to two or more people until the last annuitant dies.
pay out for annuitant
period certain payout option (annuity)
pays a guaranteed payments for a cerain period of time, such as 10 or 20 years, whether or not the annuitant is living.
investment configuration for annuities
fixed annuities
provides a guaranteed rate of return and credit interest at a rate no lower than the contract guaranteed rate.
investment configuration for annuities
variable annuity
does not provide a guaranteed rate of return. is based on the underlying portfolio of sub accounts.
involving the stock market.
investment configuration for annuities
income tax treatment of an annuity benefit
the portion of an annuity benefits that consist of the principal (premiums paid into the annuity during the accumilation period) are not taxed. interest earned on the principal id taxable as ordanary income