Annuities are insurance contracts that can accumulate value, provide income, or do both. Study them in two steps: first classify the contract and its phases, then compare the payout choices and their protection tradeoffs.
Learning path
- Annuity Types and Phases: Learn single and flexible premiums, immediate and deferred income, fixed, variable, and indexed designs, accumulation, annuitization, liquidity, and contract roles.
- Annuity Payout Options and Suitability: Compare life-only, life with period certain, joint-and-survivor, fixed-period, and refund options by payment duration, survivor protection, and access to value.
Apply the unit
A retiree wants income for life and protection for a spouse if the retiree dies first.
- Compare a life-only payout with a joint-and-survivor option.
- Check the starting payment, the amount that continues after a death, and access to remaining value under the actual contract.
Study checkpoint
- Classify an annuity by funding, income start, and value or payment method.
- Explain what changes between accumulation and annuitization.
- Compare lifetime income, a minimum payment period, survivor income, and a fixed income bridge.
- Identify who owns the contract, whose life measures a payout, and who receives a contract-provided death benefit.
- Choose the facts that matter to suitability, including income needs, liquidity, time horizon, risk tolerance, costs, and guarantees.