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life and health

Variable annuity

Variable annuities are not guaranteed contracts because the value will vary depending upon the performance of the investment instrument. When the income period begins, the accumulation units are converted to annuity units. The value of these units varies with market performance. Benefit payments will fluctuate as a result.

Equity indexed annuities

Equity indexed annuities are not securities, but they invest on a relatively aggressive basis to aim for higher returns. Like a fixed annuity, the equity indexed annuity has a guaranteed minimum interest rate. The current interest rate that is actually credited is often tied to a familiar index like the Standard and Poors 500.

Pure Life Annuity

A Pure Life Annuity has the potential for providing the maximum income per dollar of premium if the annuitant lives beyond their life expectancy. However, if the annuitant dies before his or her life expectancy, and before the total benefit has been paid out, payments cease and there is no refund of payments to survivors.

Distributions from a Roth IRA

Distributions from a Roth IRA are not included in taxable income; however, qualified distributions cannot be made prior to the fifth year of the account's existence, or until the owner reaches age 59½.

Pure and straight life annuity settlement option

Pure or straight life annuity settlement option will only pay for as long as the annuitant lives; therefore, it has the potential to provide the highest monthly income. Any time a "period certain" option is included, it will reduce the monthly payout amount because, even if the annuitant dies, the company must continue to pay benefits for the period certain.With the Life with Guaranteed Minimum, if the annuitant dies before the principal amount (the amount he paid for the annuity) has been paid out, the remainder of the principal amount will be refunded to his/her beneficiary

Installments for a fixed period annuity option

Under the "installments for a fixed period" option, the annuitant selects the time period for the benefits, and the insurer determines how much each payment will be. This option pays for a specific period of time only, and there are no life contingencies.

Owners of annuities

Owners of annuities can be individuals or entities like corporations and trusts, but the annuitant must be a natural person, whose life expectancy is taken into consideration for the annuity.

Immediate Annuity

Immediate Annuity is one that is purchased with a single, lump sum and provides income payments that start within one year from the date of purchase.

Tax sheltered annuity

A tax sheltered annuity is a special tax-favored retirement plan available only to certain groups of employees (nonprofit charitable, educational, religious, and other 501c(3) organizations, including all employees in public education).

Annuity accumulation period

The "accumulation period" is the period of time over which the annuitant makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred. The accumulation period is also known as the pay-in period.

Differences between fixed and variable annuities

The three main differences between fixed and variable annuities are the interest rate, the underlying investment, and the licensing requirements.

annuitization period

The "annuitization period" (annuity period) is the time during which accumulated money is converted into an income stream.

Non-qualified retirement plans

Non-qualified retirement plans do not meet the IRS' requirements for favorable tax treatment. Contributions to these plans grow tax deferred; however, they are not tax exempt. Increases of funds during the accumulation period are not taxed until they are actually received

Installment refund annuity

Installment refund annuity guarantees payments to the annuitant each year as long as the annuitant lives. Upon death, the annuity will refund the remaining payments to a beneficiary in installments.

Deferred annuities

Deferred annuities may be purchased with either a single lump sum or periodic payments, but they do not begin the income payments until sometime after 1 year from the date of purchase.

Fixed amount installments options

Under the installments for a fixed amount option, the annuitant selects the amount of each payment, and the insurer determines how long they will pay benefits. This option pays a specific amount until the funds are exhausted. There are no life contingencies.

IRA details and age

Anyone with earned income who has not attained age 70 1/2 can have an IRA. Any eligible person not participating in a qualified retirement plan can take a full deduction from taxable income up to the maximum limit. Also, individuals who are not covered by an employer-sponsored plan may deduct the full amount of their IRA contributions regardless of their income level.

A fixed annuity

A fixed annuity is fixed in the sense that it provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next. The company also guarantees the specified dollar amount for each payment and the length of the payout period. Annuities do not provide a death benefit.

Fixed annuities

Fixed annuities invest premium payments into a general account; which is a safe and conservative investment portfolio. They also provide a specified dollar amount for each annuity payment regardless of the purchasing power of the money. Variable annuities premiums are invested in securities, hopefully maintaining a constant purchasing power, and therefore providing protection against inflation.

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