Key Concepts
Annuity Payout Options - Payout periods can be for a specified term of years, for life, or a combination of the two.
Deferred Annuity - Provides for postponement of the commencement of an annuity until after a specified period or until the annuitant attains a specified age.
Equity Indexed Annuity - A fixed deferred annuity that offers the traditional guaranteed minimum interest rate and an excess interest feature that is based on the performance of an external equities market index.
Exclusion Ratio - A fraction used to determine the amount of annual income exempt from federal income tax; the total contribution divided by the expected ratio.
Fixed Annuity - A type of annuity that provides a guaranteed fixed benefit amount payable for the life of the annuitant.
Immediate Annuity - Provides for payment of annuity benefit at one payment interval from date of purchase.
Single-Premium Annuity - Annuity purchased with the entire premium paid in one sum at the time of purchase.
Structured Settlements - Annuities can be used to distribute funds from the settlement of lawsuits or the winnings of lotteries and other contests. Such arrangements are called structured settlements.
Tax-Sheltered Annuity - Reserved for nonprofit organizations and their employees. Funds contributed to the annuity are excluded from current taxable income and are only taxed later when benefits begin to be paid.
Variable Annuity - Gives no guarantee of the dollar amount of annuity payments because they fluctuate according to the value of an account invested primarily in common stocks.
Familiarize yourself with the Key Concepts in the Florida study manual, Unit 11.
