Term
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Definition
| A series of periodic payments. In the U.S., annuities are considered to be life insurance products and only life ins. co. can issue annuities. |
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Term
| The terms of an ANNUITY contract govern the rights and duties of the contracting parties - who can be party to an Annuity Contract? |
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Definition
| 1. The insurer that issued the contract and 2. the person or business, known as the contract owner, that owns and exercises all rights and privileges of the annuity contract. |
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Term
| The contract owner pays a single premium or a series of premiums to the insurer. These are called Annuity Considerations. How is that money used? |
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Definition
| The insurer pools the money it has received from a large group of contract owners, and it invests those pooled funds. |
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Term
What do the following terms refer to?
Annuitant
Payee
Annuity Date
Annuity Period |
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Definition
| Annuitant is the person who lifetime is used to determine the amt. of benefits payable. The Payee is the person named to receive the periodic income pmts. The Annuity date is the date the insurer begins to pay periodic pmts. The Annuity Period is the time span between each of the payments. |
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Term
| What is the difference between PAYOUT OPTIONS PROVISION AND PAYOUT OPTIONS? |
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Definition
| Payout Option Provision lists and describes each of the payout options from which the contract owner may select. Payout options are choices a contract owner has as to how the insurer will distribute annuity benefits during the payout period. |
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Term
| What is the difference between the IMMEDIATE ANNUITY and a DEFERRED ANNUITY? |
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Definition
Immediate Annuity provides periodic income pmt's that are scheduled to begin one annuity period after the date the contract is issued.
Deferred Annuity is where periodic income payments are scheduled to begin more than one annuity period after the date on which the annuity was purchased. |
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Term
| What is the difference between ACCUMULATION PERIOD AND ACCUMULATION VALUE? |
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Definition
Accumulation Period is the period between the contract owner's purchase of a deferred annuity and the beginning of the payout period.
The Accumulation Value is equal to the amount paid for the annuity plus interest earned, less the amt. of any withdrawls and fees. |
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Term
| Why would people purchase a deferred annuity? |
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Definition
| People often purchase deferred annuities during their working eyars in aniticipation of the need for retirement income later in their lives. |
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Term
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Definition
| Exercising the right to receive periodic income pmts from a deferred annuity. |
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Term
| What is the difference between a SINGLE PREMIUM ANNUITY and a FLEXIBLE PREMIUM ANNUITY? |
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Definition
| Single Premium Annuity is purchased by a single lump sum amt. A Flexible Premium Annuity is where a contract owner pays premiums over a stated period of time. |
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Term
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Definition
| Insurer guarantees that the contracts accumulation value will experience no loss of principal and will learn at least the minimum guaranteed interest rate and the periodic income pmts will not fall below a stated minimum amt. |
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Term
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Definition
| It is the statistical measurement system that tracks the performance of a group of similar investments. |
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Term
| What is a VARIABLE ANNUITY? |
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Definition
| This is where the amount of the accumulation value and the amount of the periodic income pmts fluctuate. Accumulation units are like shares. |
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Term
| What is the WITHDRAWL PROVISION and What is the Withdrawl Charge? |
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Definition
| Withdrawl Provision gives the contract owner the right to withdraw all or a portion of the annuity's accumulation value during the accumulation period. If more than the stated percentage is taken in a year, they are charged. |
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Term
| What is a Straight Life Annuity? |
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Definition
| Provides periodic income pmts. for only as long as the annuitant lives. |
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Term
| What is Canada's Individual Retirement Savings Plan called? |
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Definition
| Registed Retirement Savings Plan (RRSP). They are not taxed until withdrawn and they can withdrawl at age 69. |
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Term
| What is the difference between an INDIVIDUAL RETIRMEMENT ARRANGEMENT (IRA) AND A TRADITIONAL IRA? |
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Definition
Individual allows a person with taxable compensation to deposit a stated amt. that meets federal tax laws.
Traditional IRA contributions may be deductible and investment earnings are tax deferred until the funds are withdrawn. |
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Term
| At what age can a person be to make annual withdrawl of at least a specified minimum amt? |
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Definition
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Term
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Definition
| Nondeductible contributions annually and tax-free withdrawls. In other words, they are not taxed when they are withdrawn because they were taxed previously. |
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