LOMA 281 Module 2 Lesson 3
Questions & ANSWERS(RATED
A+)
Annuity - ANSWER insurance against the risk of outliving one's financial resources
annuity contract - ANSWER A contract under which an insurer promises to make a series of periodic
payments to a named individual in exchange for a premium or a series of premiums.
contract owner - ANSWER The person or other entity who owns and exercises all the rights and
privileges of an annuity contract.
annuitant - ANSWER The person whose lifetime is used to determine the amount of benefits payable
under an annuity contract. If not the contract owner, they are not a party to the contract.
payee - ANSWER The person or entity who receives the periodic income payments according to the
terms of an annuity contract. If not the contract owner, they are not a party to the contract.
beneficiary - ANSWER The party designated to receive the policy proceeds following the death of the
insured. Also known as first beneficiary.
accumulation value - ANSWER equals the premiums paid, plus investment earnings, less withdrawals
or fees.
fixed annuity - ANSWER An annuity contract under which the insurer guarantees the minimum
interest rate that will be applied to the annuity's accumulation value during the accumulation period
and the minimum amount of the periodic income payments that will be made during the payout
period.
, variable annuity - ANSWER An annuity under which the amount of the accumulation value and the
amount of the periodic income payments fluctuate in accordance with the performance of one or
more specified fund options. Contract owner assumes most or all of the risk.
hybrid annuities - ANSWER combine features of fixed annuities and variable annuities.
fixed-indexed annuity - ANSWER offers principal and interest rate guarantees, as well as the
possibility of additional earnings based on changes in a published index, such as the Standard &
Poor's 500 Composite Stock Price Index (the S&P 500)
market value adjusted annuity - ANSWER An annuity that offers multiple guarantee periods and
multiple fixed interest rates.
deferred annuity - ANSWER pay a death benefit to a named beneficiary if the contract owner dies
before annuity payments begin, the greater of the accumulated cash value or premiums paid less
withdrawals.
guaranteed minimum death benefit - ANSWER A variable annuity contract feature which guarantees
that, if the annuitant dies before periodic income payments begin, the beneficiary will receive at
least a stated amount, regardless of the contract's accumulation value at that time.
guaranteed minimum accumulation benefit - ANSWER A variable annuity contract feature which
guarantees that the accumulation value will be at least a minimum amount if the contract remains in
force for a specified period of time—typically 7 to 10 years.
withdrawal provision - ANSWER A deferred annuity contract provision that gives the contract owner
the right to withdraw all or part of the contract's accumulation value during the accumulation
period.
withdrawal charge - ANSWER A charge imposed on the owner of a deferred annuity when the owner
withdraws more than a stated percentage of the annuity contract's accumulation value in one year.
surrender value - ANSWER The accumulation value of a deferred annuity less any surrender charges
included in the contract.
Questions & ANSWERS(RATED
A+)
Annuity - ANSWER insurance against the risk of outliving one's financial resources
annuity contract - ANSWER A contract under which an insurer promises to make a series of periodic
payments to a named individual in exchange for a premium or a series of premiums.
contract owner - ANSWER The person or other entity who owns and exercises all the rights and
privileges of an annuity contract.
annuitant - ANSWER The person whose lifetime is used to determine the amount of benefits payable
under an annuity contract. If not the contract owner, they are not a party to the contract.
payee - ANSWER The person or entity who receives the periodic income payments according to the
terms of an annuity contract. If not the contract owner, they are not a party to the contract.
beneficiary - ANSWER The party designated to receive the policy proceeds following the death of the
insured. Also known as first beneficiary.
accumulation value - ANSWER equals the premiums paid, plus investment earnings, less withdrawals
or fees.
fixed annuity - ANSWER An annuity contract under which the insurer guarantees the minimum
interest rate that will be applied to the annuity's accumulation value during the accumulation period
and the minimum amount of the periodic income payments that will be made during the payout
period.
, variable annuity - ANSWER An annuity under which the amount of the accumulation value and the
amount of the periodic income payments fluctuate in accordance with the performance of one or
more specified fund options. Contract owner assumes most or all of the risk.
hybrid annuities - ANSWER combine features of fixed annuities and variable annuities.
fixed-indexed annuity - ANSWER offers principal and interest rate guarantees, as well as the
possibility of additional earnings based on changes in a published index, such as the Standard &
Poor's 500 Composite Stock Price Index (the S&P 500)
market value adjusted annuity - ANSWER An annuity that offers multiple guarantee periods and
multiple fixed interest rates.
deferred annuity - ANSWER pay a death benefit to a named beneficiary if the contract owner dies
before annuity payments begin, the greater of the accumulated cash value or premiums paid less
withdrawals.
guaranteed minimum death benefit - ANSWER A variable annuity contract feature which guarantees
that, if the annuitant dies before periodic income payments begin, the beneficiary will receive at
least a stated amount, regardless of the contract's accumulation value at that time.
guaranteed minimum accumulation benefit - ANSWER A variable annuity contract feature which
guarantees that the accumulation value will be at least a minimum amount if the contract remains in
force for a specified period of time—typically 7 to 10 years.
withdrawal provision - ANSWER A deferred annuity contract provision that gives the contract owner
the right to withdraw all or part of the contract's accumulation value during the accumulation
period.
withdrawal charge - ANSWER A charge imposed on the owner of a deferred annuity when the owner
withdraws more than a stated percentage of the annuity contract's accumulation value in one year.
surrender value - ANSWER The accumulation value of a deferred annuity less any surrender charges
included in the contract.
