Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Specific to Life Insurance and AnnuitiesEasy
A Florida resident owns a variable annuity and is considering annuitizing the contract. They are concerned about market fluctuations affecting their retirement income. Which annuitization option would best protect them from investment risk during the payout phase?
- AVariable Life Annuity
- BFixed-period Annuity
- CJoint and Last Survivor Annuity
- DFixed-amount Annuity
Show answer & explanationAnswer & explanation
Correct answer: D. Fixed-amount Annuity
A fixed-amount annuity provides a predetermined, guaranteed payment amount for a specified period or until the funds are exhausted, shielding the annuitant from market fluctuations during the payout phase.
Why the other options are wrong
- A. This option is a life insurance policy, not an annuitization option for a variable annuity.
- B. This option guarantees payments for a set duration but doesn't inherently shield against investment risk in a variable annuity payout.
- C. This option determines how long payments are made based on two lives, not the investment risk.
Fixed-Amount Annuity
An annuitization option where the annuitant receives a guaranteed, predetermined payment amount for a specified period or until the principal and interest are exhausted.
- Guaranteed payment amount
- Shields from market fluctuations during payout
- Payments continue until funds are depleted or for a set period
Memory trick: Fixed-Amount: Your money's safe, like a 'fixed' income stream.