📄️ 5.0 Annuities
Learning Objectives
📄️ 5.1 Annuity Principles and Concepts
Concept of an Annuity
📄️ 5.2 Accumulation (Pay-In) Period
The accumulation period is the time from the initial premium payment until a settlement option is selected. During this period, funds grow on a tax-deferred basis. The accumulation period exists only in deferred annuities, as immediate annuities begin making payments shortly after the premium is paid and therefore do not have an accumulation phase.
📄️ 5.3 The Annuity Period (Pay-Out/Liquidation)
The annuitization period begins when the contract owner elects to convert a deferred annuity into a stream of income payments. The selected settlement option may provide payments for a specified period of time or for the lifetime of the annuitant. If a lifetime income option is chosen, the election is generally irrevocable. At this stage, the accumulated value of the annuity is used to fund the income payments.
📄️ 5.4 Types of Annuities
Fixed (Guaranteed) Annuity
📄️ 5.5 Classification and Uses of Annuities
Annuity classifications are generally determined by the following factors:
📄️ Recap of Chapter Five
1. Annuities offer the potential to provide lifetime income. Once an annuity is annuitized, it can generate payments that continue for the lifetime of the annuitant. 5.1