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Variable Annuity |
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Definition of Variable AnnuityVariable AnnuityA form of annuity policy under which the amount of each benefit is not guaranteed or specified. The amounts fluctuate according to the earnings of a separate investment account.
Related Terms:ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. AnnuityA regular periodic payment made by an insurance company to a policyholder for a specified period Annuity dueAn annuity with n payments, wherein the first payment is made at time t = 0 and the last Annuity factorPresent value of $1 paid for each of t periods. Annuity in arrearsAn annuity with a first payment on full period hence, rather than immediately. Continuous random variableA random value that can take any fractional value within specified ranges, as Deferred nominal life annuityA monthly fixed-dollar payment beginning at retirement age. It is nominal Discrete random variableA random variable that can take only a certain specified set of discrete possible Endogenous variableA value determined within the context of a model. Equivalent annual annuityThe equivalent amount per year for some number of years that has a present Exogenous variableA variable whose value is determined outside the model in which it is used. Also called Normal annuity formThe manner in which retirement benefits are paid out. Normal random variableA random variable that has a normal probability distribution. RAMs (Reverse-annuity mortgages)Mortgages in which the bank makes a loan for an amount equal to a Random variableA function that assigns a real number to each and every possible outcome of a random experiment. Single-premium deferred annuityAn insurance policy bought by the sponsor of a pension plan for a single VariableA value determined within the context of a model. Also called endogenous variable. Variable annuitiesannuity contracts in which the issuer pays a periodic amount linked to the investment Variable costA cost that is directly proportional to the volume of output produced. When production is zero, Variable life insurance policyA whole life insurance policy that provides a death benefit dependent on the Variable price securityA security, such as stocks or bonds, that sells at a fluctuating, market-determined price. Variable rate CDsShort-term certificate of deposits that pay interest periodically on roll dates. On each roll Variable rated demand bond (VRDB)Floating rate bond that can be sold back periodically to the issuer. Variable rate loanLoan made at an interest rate that fluctuates based on a base interest rate such as the VARIABLE EXPENSESThose that vary with the amount of goods you produce or sell. These may include utility bills, labor, etc. Semi-variable costsCosts that have both fixed and variable components. Variable costA cost that increases or decreases in proportion with increases or decreases in the volume of production of goods or services. Variable costingA method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs. variable expensesExpenses that change with changes in either sales volume AnnuityA series of payments or deposits of equal size spaced evenly over Annuity Dueannuity where the payments are to be made at the beginning of Ordinary AnnuityAn annuity where the payments are made at the end of each annuity duea series of equal cash flows being received or paid at the beginning of a period decision variablean unknown item for which a linear programming dependent variablean unknown variable that is to be predicted independent variablea variable that, when changed, will key variablea critical factor that management believes will ordinary annuitya series of equal cash flows being received slack variablea variable used in a linear programming problem surplus variablea variable used in a linear programming problem that represents overachievement of a minimum requirement; it is associated with greater-than-or-equal-to constraints variable costa cost that varies in total in direct proportion variable costinga cost accumulation and reporting method variable cost ratiothe proportion of each revenue dollar variable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity AnnuityA series of payments over a period of time. The payments are usually Variable costA cost that changes in amount in relation to changes in a related activity. annuityEqually spaced level stream of cash flows. annuity dueLevel stream of cash flows starting immediately. annuity factorPresent value of an annuity of $1 per period. variable costsCosts that change as the level of output changes. Individual Retirement AnnuityAn IRA comprised of an annuity that is managed AnnuityA contract which provides an income for a specified period of time, such as a certain number of years or for life. An annuity is like a life insurance policy in reverse. The purchaser gives the life insurance company a lump sum of money and the life insurance company pays the purchaser a regular income, usually monthly. Back To Back AnnuityThis term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application. Deferred AnnuityAn annuity providing for income payments to commence at a specified future time. AnnuityPeriodic payments made to an individual under the terms of the policy. Annuity PeriodThe time between each payment under an annuity. Guaranteed Interest Annuity (GIA)Interest bearing investment with fixed rate and term. Alternative mortgage instrumentsVariations of mortgage instruments such as adjustable-rate and variablerate
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