annuities Flashcards

solidify terminology

1
Q

annuities

what is an annuity?

A

protect against the risk of living too long.

the fear of outliving your retirement plan

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2
Q

structure or design of an annuity

what is an immediate annuity

A

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)

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3
Q

structure and design of an annuity

what is a deffered annuity

A

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).

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4
Q

pay out for annuitant

straight life income payout option (annuity)

A

pays the annuitant a guaranteed income for the annuitant’s lifetime or till death

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5
Q

pay out for annuitant

cash refund payout option (annuity)

A

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

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6
Q

pay out for annuitant

installment refund payout option (annuity)

A

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

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7
Q

pay out for annuitant

who is the owner of an annuity

A

the annuitant, benefeciary or neither.

neither in a sense of collateral

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8
Q

pay out for annuitant

life with period certain payout option (annuity)

A

id designed to pay the annuitant guaranteed paments fot the life of the annuitant or for a specific perid of time for tthe beneficiary.

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9
Q

pay out for annuitant

joint and full survivorship payout option (annuity)

A

pays out the annuity to two or more people until the last annuitant dies.

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10
Q

pay out for annuitant

period certain payout option (annuity)

A

pays a guaranteed payments for a cerain period of time, such as 10 or 20 years, whether or not the annuitant is living.

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11
Q

investment configuration for annuities

fixed annuities

A

provides a guaranteed rate of return and credit interest at a rate no lower than the contract guaranteed rate.

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12
Q

investment configuration for annuities

variable annuity

A

does not provide a guaranteed rate of return. is based on the underlying portfolio of sub accounts.

involving the stock market.

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13
Q

investment configuration for annuities

income tax treatment of an annuity benefit

A

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

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