Questions and Answers
What type of annuity is best suited for S, who recently received a $500,000 lump sum retirement buyout?
Payments are made to an annuitant for life in an Individual Straight Life annuity.
True
What is an element of a Single Premium annuity?
Lump-sum payment
Which of the following are Equity Indexed annuities typically invested in?
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What type of annuity has a cash value that is based upon the performance of its underlying investment funds?
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A ____ annuity pays benefits based on units rather than stated dollar amounts.
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What characteristic does a Variable Annuity have?
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What will T receive after purchasing a Straight Life Annuity?
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Which type of annuity does Q likely own if the payments are no less than $250 quarterly?
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What type of annuity can be purchased with one monetary deposit?
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Study Notes
Annuities Overview
- A single premium annuity requires a lump-sum payment, providing immediate income for life.
- Individual Straight Life annuities guarantee payments to the annuitant for their entire lifespan.
Types of Annuities
- Equity Indexed annuities often invest in benchmarks like the S&P 500 to determine returns.
- Variable annuities feature cash values that fluctuate based on the performance of selected investment funds.
- A variable annuity provides benefits based on unit values, rather than fixed dollar amounts.
Key Characteristics
- Underlying equity investments define variable annuities, linking returns to stock market performance.
- Straight Life Annuities offer income that cannot be outlived, making them suitable for long-term financial security.
Payment Structures
- Flexible Installment Deferred annuities guarantee a minimum payment of $250 quarterly.
- Immediate annuities are purchased with a single payment to start income immediately.
Important Considerations
- Retirees should evaluate annuity types based on desired income stability and investment risk tolerance.
- Understanding the structure and benefits of each annuity type is essential for strategic retirement planning.
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Description
Test your knowledge on various types of annuities with these flashcards. Learn about key concepts such as single premium annuities and Individual Straight Life annuities. This resource is perfect for anyone studying retirement planning or financial products.
