Page 52 - Life Assurance

During the accumulation period, variable
annuity premiums purchase accumulation units,
which are then converted into annuity units at
retirement. The number of annuity units remains
constant during retirement, but the value of the
annuity unit’s changes periodically so that the
income payments will change over time.

Variable annuities typically pay a guaranteed
death benefits if the annuitant dies before
retirement. The typical death benefit is the higher of
two amounts: the amount invested in the contract or
the value of the account at the time of death.

15- What are the charges of a variable
annuity?

Variable annuities have numerous fees and
charges. These charges include an investment
management fee, a charge for administrative
expenses, a management and expense risk charge
for the guaranteed death benefit and other
guarantees, and a surrender charge that declines
over time. In the aggregate, total fees and expenses
can be substantial.

15- Explain the following retirement ages in
a typical qualified retirement plan:

a. Early retirement age
b. Normal retirement age
c. Deferred retirement age

17- Briefly explain the basic characteristics
of a defined-contribution retirement plan.

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