Basic Formulas: Present value interest factor of an annuity‚ PVIFA(k‚n) = [ 1 – ( 1 + k )-n ] / k Present value interest factor of a perpetuity‚ PVIFA(k; ∞) = 1 / k Future value interest factor of an annuity‚ FVIFA(k‚n) = [ ( 1 + k )n –1 ] / k Annuities Due‚ payments at start of period‚ PVIFADue(k‚n) = PVIFA(k‚n) * ( 1 + k ) FVIFADue(k‚n) = FVIFA(k‚n) * ( 1 + k ) Where: k is the effective discount rate
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Ethical Considerations in Annuity Sales to Seniors National American University TABLE OF CONTENTS A. Abstract B. Introduction - Thesis C. Definitions i. Annuities ii. Fiduciary responsibility D. The specialty of the senior market E. The evolution of ethical issues surrounding sales to seniors F. The Government’s Involvement in the Problem G. In general‚ when is selling these products to seniors inappropriate? H. In general‚ when is selling
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Retirement Annuity Sunrise Industries wishes to accumulate funds to provide a retirement annuity for its vice president of research‚ Jill Moran. Ms. Moran‚ by contract‚ will retire at the end of exactly 12 years. Upon retirement‚ she is entitled to receive an annual end-of-year payment of $42‚000 for exactly 20 years. If she dies prior to the end of the 20-year period‚ the annual payments will pass to her heirs. During the 12-year “accumulation period‚” Sunrise wishes to the fund the annuity by making
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Annuities An annuity is a financial product sold by financial institutions that is designed to accept and grow funds from an individual and then payout a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years. A fixed sum of money paid to someone each year‚ typically for the rest of their life. Annuities are a popular choice for investors who want to receive a steady
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ANNUITY DUE An annuity for which the periodic payments are made at the beginning of each payment interval. The term of an annuity due begins on the date of the first payment interval after the last payment is made. FUTURE VALUE OF ANNUITY DUE 1. Using the Annuity Table * Uses the same table as ordinary annuities but with some modifications. Example : Ferdie Gonzales deposited P6‚000 at the beginning of each month‚ for 2 years at his credit union. If the
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year for 5 years earning 4 percent would be approximately ( 3 pts) A. $5‚000 B. $5‚250 C. $5‚400 D. $6‚500 E. $8‚200 This is an “annuity”. $1‚000 is your “payment”. Use the FV of an annuity table Question 4: You are given the choice of $4‚000 in extra taxable income per year or a tax-exempt medical policy. The medical policy costs $300 per month. Your tax rate is 25%. You should take the medical policy
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Benefits of solving the problem 5. Business/technical approach 6. High level solution 7. References 1. Business problem statement Their mission is to provide financial security and insurance products and has a very important purpose‚ annuity and investment services for insurance products. Also to provide incentives for families and business owners to reach agreement to set appointments for financial services and several charities that with being a resource center of influence‚ and investigative
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TIME VALUE Time Value • Interest Rates • Compounding • Discounting • Effective Rates • Annuities • Perpetuities 2 Interest Rates • Types – Bank rate vs. Prime rate – Mortgage rates – Deposit‚ Loan‚ Credit rates • Movement – Demand / Supply – Inflation/ Deflation – Government intervention 3 Main Components 1. Real 2. Inflation 3. Risk *Note: - Risk Free (Rf) = Real + Inflation - Nominal = Rf + Risk Premium 4 Risk Free & Real Rate • Risk Free (Rf) = Real +
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first-year premium would not be different from any other year. #23. Your client wants both protection and savings from the insurance‚ and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? A) Life annuity‚ period certain B) Increasing term insurance c) Limited pay whole life insurance D) 10-year endowment Premium payments will cease at her age 65‚ but coverage will continue to her death or age 100. #26. An
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so the life insurance companies have to pay claim against policy. Infant mortality rate and maternity mortality rate are also affecting to insurance. Typical consumer want luxurious product against low income‚ so that they prefer installment or annuity (EMI)‚ so thatthey may not have extra saving to invest in life insurance. Social factor The population in the age group 15-55 is usually regarded as the insurable population‚ since this can be considered as the main “active” age group ( in the sense
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