Table of Contents
What are the characteristics of annuity?
In general, annuities have the following features.
- Tax deferral on investment earnings.
- Protection from creditors.
- An array of investment options.
- Taxfree transfers among investment options.
- Lifetime income.
- Benefits to heirs.
What are annuity products?
An annuity is an insurance product designed to provide consumers with guaranteed income for life. This contract transfers your longevity risk — the risk of you outliving your savings — to the insurance company. In exchange, you pay premiums as outlined in the contract.
What is the most common use of an annuity?
Annuities are used mainly to supplement more traditional sources of retirement income such as Social Security and pension plans. Common features include: Tax-deferred growth. You will pay no income taxes on the earnings from your annuity investments until you begin making withdrawals or receiving periodic payments.
Which of the following is a characteristic of variable annuity?
Which of the following is a characteristic of a variable annuity? Variable annuities involve underlying equity investments in a separate account. How does an indexed annuity differ from a fixed annuity? An immediate annuity has a single premium.
Which of the following is characteristic of a fixed annuity?
Which of the following is characteristic of fixed annuities? Interest rates are fixed during both phases of the annuity. Each payment amount is fixed, and premiums are invested in the insurer’s general account.
What are variable annuity products?
A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic pay- ments to you, beginning either immediately or at some future date. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments.