Florida 2-15 Overview/ Study Guide (Fool Proof Guide): Annuities Exam Questions And Answers

Florida 2-15 Overview/ Study Guide (Fool Proof Guide): Annuities Exam Questions And Answers Annuity - ANS A savings plan within an insurance company instead of a bank. - An annuity is not considered insurance, but the life insurance industry handles them Fixed Annuity - ANS A savings plan with an insurance company with a minimum guaranteed interest rate Accumulation Period - ANS The period in an annuity where the savings is building Annuity Period - ANS The payout period of an annuity What is the purpose of an annuity? - ANS To provide income for life. The concept of an annuity is to save during the annuitants working years and payout over the annuitants retirement years. Once an annuity is annualized it pays out as long as the annuitant lives. Annuitization Point - ANS The point the annuity pays out to the annuitant. -Usually at age 65 Deferred Annuity - ANS Save for the future early and pay out at a future date. Usually at age 65 Single Premium (Annuity) - ANS You pay one time payment for the annuity What are some key features to remember about annuities? - ANS 1. Tax Deferred 2. They are protected from suit 3. They tend to earn a greater return than a savings account of a CD at a bank. What are two ways an annuity is paid out? - ANS Immediate and Deferred When does an immediate annuity payout? - ANS One payment interval from the date of purchase. Meaning if you buy an annuity today you will have to wait 30 days (one month) to receive the first monthly payment What are six different annuity payout options? - ANS 1. Straight Life Income 2. Cash Refund 3. Installment Refund 4. Life with period certain 5. Joint and full survivor 6. Period Certain Straight Life Income - ANS This option payout the established amount for the lifetime of the annuitant. -It is guaranteed for the annuitants life Cash Refund - ANS This option states that if the annuitant dies sooner than calculated, the beneficiary will receive a lump sum cash refund -Guarantees that the money paid out will be at least as much as the payout started with before the annuitant died Installment Refund - ANS This option states that if the annuitant dies sooner than calculated, the beneficiary will receive installment payments-Guarantees that the money paid out will be at least as much as the payout started with before the annuitant died -Guarantees that the money paid out will be at least as much as the payout started with before the annuitant died Life with period certain - ANS This option again pays for the whole life of the annuitant, plus guarantees that is will pay no less than the specified time. -Example: Life with period certain 10 years will payout for the lifetime of the annuitant but if the annuitant dies before the 10 year point, the annuity will continue to payout till the end of the 10year window. Joint and Full Survivor - ANS Designed for two people to receive payout. Ex: if George and Martha are receiving annuities and george dies, martha will still receive the same monthly payout