A Comprehensive Guide to the Annuity Insurance System: Analysis of Diverse Payment Methods from the Accumulation Period to the Liquidation Period

Section 3 Special Life Insurance I. Annuity Insurance (I) Overview of Annuity Insurance Annuity insurance refers to insurance in which the insurer pays insurance money to the insured regularly and periodically according to the amount and method agreed in the contract during the insured's lifetime. Annuity insurance is also a life insurance with the insured's survival as the condition for payment. Since the payment of survival insurance money is usually made in the form of a certain amount paid on an annual cycle, it is called annuity insurance. Annuity insurance solves the life problems of the elderly quite well. (II) Classification of Annuity Insurance 1. According to different payment methods (1) Lump-sum payment Annuity insurance refers to an insurance where the policyholder pays all the insurance premiums at once, and then the recipient receives the annuity on schedule from the agreed annuity payment start date. (2) Installment payment The policyholder of an annuity pays the insurance premiums in installments before the insurance payment start date. 2. According to the different start time of annuity payments: (1) Immediate annuity refers to an annuity insurance in which the insurer immediately pays the annuity on schedule after the policyholder pays all premiums and the insurance contract is established and becomes effective. (2) Deferred annuity refers to an annuity insurance in which the annuity payment begins after the insurance contract is established and becomes effective and the insured reaches a certain age or after a certain period of time, provided that the insured is still alive. 3. According to the different insured persons: (1) Individual annuity is also known as single-life annuity, in which the insured is an independent individual. (2) Joint and survivor annuity refers to an annuity in which, among two or more insured persons, at least one person is alive on the agreed payment start date, and the annuity is paid until the last survivor dies. The policyholders of this type of annuity are mostly couples. (3) Joint annuity refers to an annuity in which, among two or more insured persons, the insurance payment terminates as soon as one of them dies. 4. According to the different payment periods: (1) Term annuity refers to an annuity in which the insurer and the insured have an agreed annuity payment period. It is divided into a fixed annuity (fixed-term payment) and a survival annuity (payment during the survival period). (2) A whole life annuity is an annuity in which the insurer terminates the payment of the insurance annuity upon the death of the insured. This type of insurance is most advantageous for long-lived insureds. (3) A minimum guaranteed annuity is created to prevent the insured from losing the right to receive the annuity due to premature death. It includes a guarantee based on the number of payment years (fixed payment annuity) and a guarantee based on the payment amount (refundable annuity). 5. Whether the insurance annuity payment amount changes (1) A fixed annuity has a fixed payment amount. (2) A variable annuity has an investment segregated account, and the payment amount varies with the asset returns.

(III) Insurance Company's Payment Liability During the Accumulation and Settlement Periods Annuities have an accumulation period and a settlement period. The accumulation period is a period during which annuity funds are accumulated. The settlement period is the time when the annuity pays funds to the annuity recipient. 1. Payment Liability During the Accumulation Period During the accumulation period of annuities, if the annuity purchaser dies, the insurance company is obligated to refund all or part of the annuity value. Its value is the annuity premium paid at that time minus the withdrawn funds and expenses, plus the accrued interest. 2. Payment Liability During the Settlement Period Lifetime annuity payments can be divided into two forms: pure lifetime payments and annuity payments with premium refunds. Pure lifetime annuities (ordinary lifetime annuities) provide annuity payments until the recipient's death, and premiums are not refunded after death. Annuities with premium refunds include: (1) Guaranteed and Continuous Lifetime Annuities. This means that regardless of whether the recipient lives or dies, they will receive a guaranteed number of payments. The guarantee period is usually 5, 10, 15, or 20 years. (2) Installment Refund Annuity. If the total amount received is less than the cost upon the death of the beneficiary, the income will continue to be paid to the beneficiary until the full amount is received. (3) Cash Refund Annuity. The difference between the total income and the cost of receiving the annuity is paid to the beneficiary in cash in a lump sum. Since the insurance company loses the interest it could have earned by issuing a cash refund, the payout provided for the same premium is less than that of an installment refund.