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Annuities
Liquidation of a estate
Mortality Tables
Owner may be a…
Annuities
- Liquidation of a estate
- Mortality Tables
- Owner may be a corporation, trust or other legal entity.
- Annuitant - life expectancy considered, receive the benefits, usually contract owner and must be a natural person.
- Beneficiary - if the annuitant dies.
- Accumulation period = pay-in period = tax deferred basis.
- Annuity period = pay-out period = liquidation period = Annuitization period.
Income based in amount of premium paid, cash value, frequency of payment, interest rate and annuitant’s age and gender.
- Usually used for retirement income, college education fund or for structured settlements (lawsuits of insurance - payment option)
- Liquidating a principal sum regardless of how it was accumulated.
Income Payment Start
Immediate
- Payments can start in a month.
- Only single premium - SPIA
Deferred
- Payments begin afternoon year.
- can be SPDA or FPDA - single or flexible payments.
Premium Investment
Fixed
- Minimun rate interest guaranteed
- Payment do not variate.
- Level benefit payment amount - can be eroded by inflation.
- Insurance company bear the investment risk.
Equity Index
- Fixed because besides of the payments guarantee minimun interest rate
Variable
- Underlying Investment - Separate account.
- Interest rate not guarantee.
- Different rates of return - hedge against inflation.
- Lincese SEC, State Life Insurance and registered in FINRA.
- Accumulations Units = Mutual Fund , converted in annuity units.
Disposing of Proceeds or Settlement Options
- Beneficiary receives amount paid into the plan or the cash value whichever is greater - if annuitant dies.
Joint Life
- Payments until the first death.
Annuity Certain
- Specific period of life designed to receive the payments.
-If the annuitant dies the amount goes to beneficiary.
Life Refund Annuity
- Annuitant dies balance is refunded to the beneficiary.
Life Only
- Only pays when the insured is alive.
- Amounts not paid out retained by the company.
- Pays highest monthly amount.
Joint and Survivor
- The living annuitant receives 1/2 or 2/3 of the original payment amount.
Lump-Sum
- Paid at annuitization.
- Interest accumulated taxable.
- Penalty of 10% prior of age 59 1/2.
Annuities Certain
- Fixed payment guaranteed until fixed amount is paid.
- No life option.
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