Page 51 - Life Assurance

the duration of a designated life or lives. The
fundamental purpose of a life annuity is to provide
lifetime income that cannot be outlived.

12- Describe the major characteristics of a
fixed annuity.

A fixed annuity pays periodic income payments
to an annuitant that are guaranteed and fixed in
amount. A fixed annuity can be purchased so that
income payments start immediately or can be
deferred to some later date. Deferred annuities
typically provide flexible premiums.

13- Identify the annuity settlement options
that are typically found in a fixed annuity.

Annuity settlement options typically include the
following:

- Cash
- Life income (no refund)
- Life income with guaranteed payments
- Installment refund option
- Joint-and survivor annuity option

14- Describe the major characteristics of a
variable annuity.

A variable annuity pays a lifetime income, but
the income payments will vary depending on the
investment experience of the sub account in which
the premiums are invested. The purpose of this type
of annuity is to provide an inflation hedge by
maintaining the real purchasing power of the
periodic payments.

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