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Definition
| is a periodic payment that continues for a fixed period or for the duration of a designated life or lives |
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Definition
| the person who receives the payment |
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Term
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Definition
| provides protection against the risk of excessive longevity (living too long) |
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Term
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Definition
| the fundamental purpose is to provide a lifetime income that cannot be outlived |
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Term
| The major types of annuities sold today include |
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Definition
O fixed annuity
O variable annuity
O equity-indexed annuity |
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Term
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Definition
pays periodic income payments that
are guaranteed and fixed in amount |
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Term
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Definition
| prior to retirement, premiums are credited with interest |
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Term
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Definition
| is the minimum interest rate that will be credited to the fixed annuity |
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Term
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Definition
| is based on current market conditions, and is guaranteed only for a limited period |
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Term
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Definition
| is the periods in which funds are paid out, or annuitized |
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Term
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Definition
is one where the first payment is due one payment interval from the date of purchase
provides a guaranteed lifetime income that cannot be outlived |
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Term
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Definition
| provides income payments at some future date |
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Term
| _single premium deferred annuity |
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Definition
| A deferred annuity purchase with a lump sum |
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Term
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Definition
| allows the owner to vary the premium payments |
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Term
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Definition
| provides a life income to the annuitant only while the annuitant remains alive |
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Term
| life annuity with guaranteed payments |
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Definition
| pays a life income to the annuitant with a certain number of guaranteed payments |
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Term
| installment refund option |
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Definition
pays a
life income to the annuitant
If the annuitant dies before receiving the total income payments, the payments continue to a beneficiary |
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Term
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Definition
| but pays the beneficiary a lump sum |
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Term
| joint-and-survivor annuity |
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Definition
pays
benefits based on the lives of two or more annuitants. The annuity income is paid until the last annuitant dies |
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Term
| inflation-indexed annuity |
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Definition
| option provides periodic payments that are adjusted for inflation |
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Term
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Definition
pays a lifetime income, but
the income payments vary depending on common stock prices
o the purpose is to provide an inflation hedge by maintaining the real purchasing power of the payments |
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Term
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Definition
| Premiums are used to purchase _______ during the period prior to retirement |
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Term
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Definition
| At retirement, the accumulation units are converted into _________. |
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Term
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Definition
protects the principal against loss due to market declines
• Typically, if the annuitant dies before retirement, the amount paid to the beneficiary will be the
higher of two amounts: the amount invested in the contract or the value of the account at the time of death |
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Term
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Definition
is a fixed, deferred annuity that:
o Allows the owner to participate in the growth of the stock market
A cap specifies the maximum percentage of gain that is credited to the contract
o Provides downside protection against the loss of principle and prior interest earnings if the annuity is held to term |
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Term
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Definition
| is the percent of increase in the stock index that is credited to the contract |
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Term
| individual retirement account |
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Definition
(IRA) allows workers with taxable compensation to make annual contributions to a retirement plan up
to certain limits and receive favorable income‐tax treatment |
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Term
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Definition
allows a worker to take a tax deduction for part or all of their IRA contributions
o The investment income accumulates income tax free on a tax deferred basis
o distributions are taxed as ordinary income
o The participant must have earned income during the year, and must be under age 70.5
o For _2012_, the maximum annual contribution is _$5000_ or 100% of earned compensation, whichever is less
•workers over 50 can contribute up to $6000 |
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Term
| A full deduction for IRA contributions is allowed if: |
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Definition
• The worker is not an active participant in an employer’s retirement plan
•the worker’s modified adjusted gross income is below certain thresholds |
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Term
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Definition
| allows a spouse who is not in the paid labor force or a low‐earning spouse to make a fully deductible contribution to a traditional IRA |
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Term
| _$5000 ($6000 if over 50)_ |
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Definition
| The maximum annual IRA deduction for a spouse who isn’t an active participant |
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Term
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Definition
type of IRA that provides substantial tax advantages
O the annual contributions to a Roth IRA are not tax deductible
o The investment income accumulates income tax free
o Qualified distributions are not taxable under certain conditions |
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