Life Insurance Policies
Life Annuities: pays equal
payments to the annuitant as long
as he still alive or up to a specific
Each annuity payment consists of:
principal, interest & survivorship
Classification of Life Annuities: 5 types:
a) Number of Annuitants (lives Covered):
1- A single-life annuity: covers one life.
2- A joint-life annuity: covers 2 lives & end at the death
of 1st death( either annuitant).
3- A joint & last survivor annuity: provides payment to 2
annuitants as long as either annuitant is alive & stop if
b)Method of Premiums Payment:
1) Single premium.
2) Annual premium (2 types: fixed &
flexible) but premium payment ends
before annuity starts.
c)Beginning of Benefits:
1)Immediate Annuity: benefits begin in the
1st period at the beginning of each period
(due) or at the end of each period
2)Deferred annuity: benefits begin
(liquidation period) after more than 1 period
(accumulation period) at the beginning
(due) or at the end (ordinary).
d) Disposition of Proceeds (Promises
1)Pure Annuity: paid only as long as the
annuitant alive or up to a specific age.
2/1- Period-Certain Annuities: paid for
minimum yrs or until the annuitant dies, which
ever occurs last (2nd beneficiary receives payments
for the rest of the certain period).
2/2-Cash Refund Annuity: if annuitant
dies before: annuities received = premiums paid,
a 2nd beneficiary receives a lamp sum = premiums
paid – annuities received
2/3-Installment Refund Annuity: if
annuitant dies before: annuities received =
premiums paid, a 2nd beneficiary receives the
annuities until: premiums paid = annuities
e) Denomination of Values (How
Benefits are Measured):
1-Fixed Currency Annuity: linked to a
national or foreign currency.
2-Units Annuity (Variable): benefits linked
to an investment fund.
Types of Annuities Contracts: 5 types:
1- Flexible Premium (with minimum)
2- Single Premium Deferred Annuity.
3- Single Premium Immediate Annuity:
3/1 - Structured Settlement Annuity (between
plaintiff & defendant) to pay for the injured.
3/2- Reverse Annuity Mortgage (between the
homeowner & a bank or Insurance
Company), insured gets an annuity (or a
loan) & insurer get the house when he dies.
4- Variable Annuity (like life insurance)
depends on investment.
5- Equity Indexed Annuity (tied to an