7 - Annuities

Fixed Deferred A Fixed Deferred annuity pays out a fixed amount for life starting at a future date.

Does not have to make any further payments With a Straight Life Annuity, the insurer does not have to make further payments after the annuitant dies.

Underlying equity investments Variable annuities involve underlying equity investments in a separate account.

Indexed annuity owners receive credited interest tied to the fluctuations of the linked index

single premium An immediate annuity has a single premium.

All of these are included in an annuity contract EXCEPT an Accidental Death & Dismemberment (AD&D) rider.

Annuity A contract that provides for the liquidation of all or part of an estate through periodic payments is known as an annuity.

Immediate annuity An immediate annuity is purchased with one monetary deposit.

Single Premium Immediate Annuities are purchased with a single lump sum payment and will start providing income payments within the first year, but usually starting 30 days from the purchase date.

An installment Refund annuity An installment Refund annuity promises that if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid.

Payments are made to an annuitant for life A Straight Life annuity pays for the life of the annuitant.

Income that cannot be outlived by the owner A Straight Life Annuity will provide an income that the owner cannot outlive.

Deferred In this situation, the type of annuity purchased is best described as deferred.

Lump-sum payment A lump-sum payment is required for a Single Premium annuity.

Immediate annuity . Immediate annuities start providing income payments usually starting within 30 days from the purchase date.

An immediate annuity An immediate annuity is designed to make its first benefit payment to the annuitant at one payment interval from the date of purchase.

. The correct answer is "Life Annuity with Period Certain". This situation involves a Life Annuity with Period Certain.

Variable A variable annuity's cash value will depend on the results of its investment funds.

S&P 500 An indexed annuity is a type of tax-deferred annuity whose credited interest is linked to an equity index — typically the S&P 500.

The correct answer is "The income from the TSA is received income tax-free". Upon retirement, payments received by employees from the accumulated savings in tax-sheltered annuities are treated as ordinary income.

A Variable annuity A Variable annuity pays benefits based on units rather than specific dollar amounts.

Insurer's corporate business account Variable annuities may invest premiums in each of these EXCEPT the "Insurer's corporate business account".

Straight Life annuity The Straight Life annuity pays the largest monthly benefit to a single annuitant because it is based only on life expectancy, but it creates a risk that the annuitant may die early and forfeit much of the value of the annuity to the insurance company.

The contract surrender value at that time If an annuity is terminated prior to beginning of the income payment period, the contract owner receives the contract surrender value at that time.

Flexible Installment Deferred

Benefit payments start within one payment period of purchase

the risk of living longer than expected A Life annuity offers protection against the risk of living longer than anticipated