Term
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Definition
| A tax free Transfer of an annuity contract from one insurer to another. A good reason to switch insurance companies is to lock in a higher return rate. Although 1035 transfer is tax free, it might be accompanied by a surrender charge if surrender fees have yet to lapse. |
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Term
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Definition
| A plan offered by an employer that lets employees make contributions to a retirement savings plan on a pre-tax basis, sometimes fully or partially matching these contributions. |
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Term
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Definition
| Similar to the 401(k) plan, but generally offered by nonprofit organizations instead of for-profit businesses. Allows contributions from employees to grow on a tax-deferred basis until they are withdrawn. At withdrawal, the funds are subject to tax like ordinary income. |
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Term
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Definition
| Named in reference to the portion of the Internal Revenue Code that defines its basic rules, the 457 is a tax-exempt deferred compensation program provided to employees in state and federal governments and agencies. While similar to the 401(k) plan, the 457 plan never receives matching contributions from the employer, nor does the IRS consider it to be a qualified retirement plan. |
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Term
| Accrued Monthly Benefit (AMB): |
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Definition
| This is the monthly amount earned toward an employee's pension via that individual's service to the employing company. |
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Term
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Definition
| The individual who receives payments from an annuity plan under the terms of that plan |
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Term
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Definition
| Refers to the payments made on a periodic basis to an individual under an annuity plan. The payments are generally provided until the individual dies. |
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Term
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Definition
| The amount of interest that has accrued to a bond since the payment of the last interest amount; buyers of bonds pay the accrued interest to the seller in addition to the market price. |
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Term
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Definition
| The individual who uses statistical mathematics to calculate the premiums, dividends, reserves, and pension, insurance and annuity rates for an insurance company or other institution involved with fiscal risk. |
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Term
| Adjusted Goss Income (AGI): |
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Definition
| The amount of income obtained after subtracting allowable adjustments from the total income received. These adjustments include contributions to an IRA, paid alimony, moving expenses, and contributions to Keogh accounts. |
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Term
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Definition
| An individual or a bank that is court-appointed to distribute the estate of a deceased person who has died without a will or who left a will that did not name an executor to perform the distribution duties. |
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Term
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Definition
| Refers to the amount of money remaining after taxes have been paid on it. |
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Term
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Definition
| A defined contribution plan in which contributions are allocated to participants so that, when converted to equivalent benefit accruals stated as a percentage of compensation received, all participants receive the same benefit accrual rate. |
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Term
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Definition
| The anniversary of the date on which an annuity starts or becomes effective. Index annuities calculate annual yield by taking the difference in the S&P 500 between anniversary dates. |
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Term
| Annual Percentage Rate (APR): |
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Definition
| The cost of a consumer loan expressed as a basic, yearly percentage amount. |
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Term
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Definition
| A way of calculating annual yield for an index annuity in which the baseline from which growth is measured resets every year. With an annual reset, previous years' growth is never lost. |
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Term
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Definition
| The individual whose life expectancy is used to determine the term of income payments to be made under an annuity contract; generally, but not necessarily, the person who receives this income. The annuitant cannot make premium deposits or cancel the contract, and has no say over the terms of the annuity or when to withdraw money. The annuitant must typically sign the contract. |
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Term
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Definition
| Annuity contracts with provisions that trigger upon the death of a designated individual (annuitant). Besides death, an annuitant's reaching of a certian age or becoming disabled, can trigger contract provisions. |
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Term
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Definition
| The process of converting an annuity contract's value into an income stream represented by periodic payments made over a specified period of time. |
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Term
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Definition
| An immediate annuity income plan from which payments are made for a defined period of time, whether or not the annuitant lives or dies. |
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Term
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Definition
| A legal contract in which an insurer promises to make periodic payments to a designated individual over a specific period of time beginning on a set date in exchange for that individual's payment of premiums to the insurer. |
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Term
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Definition
| The length of time between income payments made under an annuity income plan; the time span may be monthly, quarterly, semi-annually, or annually. |
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Term
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Definition
| The act of buying and selling commodities in two markets at the same time to benefit from price differences between the markets. |
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Term
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Definition
| The minimum rate of interest that must be obtained on investments in a variable annuity in order to cover the costs and expected profits of an insurance company. |
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Term
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Definition
| A unit of measure, with 100 basis points being equal to one percentage point. |
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Term
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Definition
| Amounts of money that have not been subjected to taxation. |
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Term
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Definition
| The individual or legal entity receiving an annuity death benefit when the annuitate designated in the contract dies. Typically a child or spouse. The beneficiary cannot manage the annuity -- a right reserved solely for the contract owner. |
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Term
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Definition
| A statistical measurement indicating the volatility of a stock or portfolio of investments, meaning how the value of the holding has risen or lowered in comparison to the general market over a defined period of time. In theory, when volatility is high, beta is also high. |
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Term
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Definition
| A form of debt created by an institution that wants to borrow money. Buyers of bonds receive periodic payments of interest, with the principal amount of the bond typically repaid as a lump sum by a specified date. |
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Term
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Definition
| The amount added by an insurance company to the premium payments of fixed, deferred annuities with surrender charges. Usually imposed as additional interest or principal in the contract's first year and totals between 1% to 5%. |
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Term
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Definition
| An arrangement designed to dispose of an interest in a business when the business's owner retires, becomes disabled, or dies. |
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Term
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Definition
| A type of annuity in which the interest rate guarantee period is equal to the surrender charge period. |
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Term
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Definition
| An annuity in which a donor provides property to a charity in exchange for an income. |
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Term
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Definition
| Secondard individual whose life determines the length of an annuity contract. Seldom indicated, the co-annuitant typically prolongs a contract because both annuitate and co-annuitant must die for the termt to cease |
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Term
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Definition
| Interest on money that accrues on both principal and accumulated interest. |
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Term
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Definition
| An arrangement in which surrender charges are eliminated if the annuity owner must be cared for in a hospital or long-term care facility due to medical necessity. |
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Term
| Consumer Price Index (CPI) |
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Definition
| The percent change in costs of consumer goods and services. CPI is a metric of consumer-felt inflation, measuring how far your dollar goes towards buying common goods and services. Typically rises 1-3% per year. |
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Term
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Definition
| The person or entity that makes application for and buys an annuity contract. This party is responsible for funding the annuity. An owner could be an individual, couple, partnership, corporation, or trust. |
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Term
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Definition
| The forced end to an annuity due to death of the annuitant. |
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Term
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Definition
| The total of paid premiums and earnings, less any charges, withdrawals, or fees that may apply. |
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Term
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Definition
| n annuity that provides a way to accumulate monies tax-deferred. |
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Term
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Definition
| Compensation for services rendered provided under an agreement stating that such compensation will be paid sometime in the future, after the actual services have been performed. |
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Term
| Employee Retirement Income Security Act (ERISA): |
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Definition
| The federal law that formed the basis for modern pension regulation by establishing requirements for nondiscrimination, vesting, participation, reporting and disclosure, as well as standards for funding and fiduciary responsibilities. |
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Term
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Definition
| An addition written to an insurance policy that includes provisions superseding those of the original policy. It is also known as a rider. |
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Term
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Definition
| An insurance policy that pays out its face amount to the individual insured when it reaches maturity, if that person is still alive. If the insured has died before the policy matures, the face amount is paid to a designated beneficiary |
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Term
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Definition
| A type of fixed annuity that earns interest connected to an outside equity index, such as the S&P 500 (Standard & Poor's 500 Composite Stock Price Index). |
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Term
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Definition
| A calculation used to calculate the taxable and non-taxable parts of each payment to an annuitant from an immediate annuity. Part of each payment is considered a return of principal and therefore not subject to taxation, while the remainder includes earnings on interest, which are taxable. |
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Term
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Definition
| An individual or organization that exercises control over a pension plan and/or the assets it holds. |
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Term
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Definition
| An annuity contract that provides a guaranteed minimum interest rate and a higher current interest rate for shorter time periods during a deferred annuity's accumulation phase. |
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Term
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Definition
| Refers to the premium rate paid on a yearly basis by pension plans to the Pension Benefit Guaranty Corporate (PBGC) on behalf of each plan participant. The rates for multi-employer and single-employer plans are different. |
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Term
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Definition
| A kind of annuity that may be bought into multiple times in the future. After depositing the initial premium, further investment can be made into the same annuity (similar to a money market account). |
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Term
| Flexible Premium Deferred Annuity (FPDA): |
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Definition
| A type of annuity in which the owner has the option to invest more money in the future, and which forgoes periodic payouts in favor of compounding interest. |
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Term
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Definition
| The provision in an annuity contract stating that the owner of the contract has between ten and 20 days to review the contract immediately after buying it. It gives the buyer the chance to return the contract to the insurer for a total refund and is governed by state regulations, which may vary. |
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Term
| Free Withdrawal Provision: |
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Definition
| The provision in an annuity contract that allows the owner to withdraw some part of its face value, without the imposition of a withdrawal charge, during the accumulation period. |
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Term
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Definition
| A sales charge imposed on an investment purchase. When such charges are imposed at the time of an investment's sale, they are called back-end load. |
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Term
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Definition
| A qualified retirement plan that disallows the continuing benefits accruals of or additional contributions for current employees and also does not permit the recognition of new plan participants. |
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Term
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Definition
| These securities, which enjoy high credit ratings since they are backed by the fully credit of the federal government, include bonds and other debts programs that are issued by the Treasury Department. |
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Term
| Guaranteed Minimum Surrender Value: |
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Definition
| Index annuities are regulated by the National Association of Insurance Commissioners, which requires investors to at least receive 90% principle + 3% for every year the contract was held. |
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Term
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Definition
| An annuity contract that begins its payout immediately or within a year. |
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Term
| Individual Retirement Account (IRA): |
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Definition
| A retirement program that permits individuals who have earned income to save part of that income in a tax-deferred savings plan. IRAs can be created and funded any time between the first day of the current year up to and including the date on which individual income tax returns are due, usually April 15 of the following year. |
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Term
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Definition
| A person named in an annuity contract in addition to the owner. This person's age and life expectancy are used along with those of the contract owner to calculate the amount of annuity payments. |
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Term
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Definition
| A type of annuity that continues to provide payments to a spouse after the death of the contract owner, regardless of the date of the death. It also allows for the designation of additional beneficiaries if the spouse dies. |
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Term
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Definition
| An individual who co-owns an annuity contract with another person. Both have the right to make and approve decisions relating to the contract. |
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Term
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Definition
| An annuity that pays a set amount on a regular, periodic basis, for the duration of the annuitant's life. |
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Term
| Market Value Adjustment (MVA): |
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Definition
| A kind of fixed annuity in which there is a guaranteed rate unless the contract owner withdraws amounts that exceed a specific free-withdrawal amount, or if the owner terminates the annuity contract before it matures. |
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Term
| Multiple Premium Annuity: |
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Definition
| This is an annuity program that requires more than one premium payment. |
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Term
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Definition
| : An income option in an immediate annuity plan whereby the owner of the annuity contract may choose to receive periodic payments for a set period of time, with the payout amount determined by the contract's value and the length of the period of time chosen. |
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Term
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Definition
| The withdrawal of earnings amounts from an annuity program before the annuity contract's owner reaches 59.5 years of age. |
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Term
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Definition
| Prescribed Annuity Contracts (PACs) offer non-taxable returns on investment, and the annuitant's interest income is included at a steady rate during the entire term of the annuity. The amount taxed is lowed than that in a non-prescribed annuity early in the term, but rises later on. |
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Term
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Definition
| A type of annuity bought with the intention to fund or distribute money from a tax-qualified plan, generally with paid premiums reducing current income tax and the use of tax-deferred accumulations. |
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Term
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Definition
| The new rate of interest credited to an annuity after the current interest-rate period is over, typically on the anniversary of the contract. This rate may be higher or lower than the current rate, depending on economic conditions and the investments used by the insurer. |
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Term
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Definition
| While similar to a traditional IRA (Individual Retirement Account), the Roth IRA's contributions are not deductible. Account distributions may be obtained free of federal income tax if certain conditions are met, however. |
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Term
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Definition
| A type of annuity plan in which the periodic payments are made to the annuity contract owner for life, but end after the owner dies. |
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Term
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Definition
| A kind of annuity into which funds cannot be deposits after the initial investment. Fixed-rate annuities are commonly of this type, requiring a second annuity purchase should the contract owner decide to invest more money at a future date. |
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Term
| Single Premium Deferred Annuity (SPDA): |
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Definition
| A kind of annuity that may be bought into once and whose payouts are withheld, compounding interest. Future investments require a new annuity purchase. |
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Term
| Single Premium Immediate Annuity (SPIA): |
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Definition
| A kind of annuity that may be bought into once and yields periodic payouts (monthly, quarterly, or annually) at the cost of compound interest. Future investments require a new annuity purchase. |
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Term
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Definition
| A type of annuity plan paying a specified amount over a set period of time until the death of the annuitant. There are no payouts available to survivors after the contract owner dies. |
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Term
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Definition
| Refers to the fact that earnings from an annuity are not taxed until they are withdrawn from the plan. |
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Term
| Tax-Sheltered Annuity (TSA): |
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Definition
| A type of retirement annuity available for purchase only by public school teachers and individuals employed by colleges, hospitals and other entities that offer qualified retirement programs under Internal Revenue Code Section 403(b). |
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Term
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Definition
| A kind of annuity plan in which predefined income payments are provided until the expiration date of the annuity product. Payments are typically made on a monthly basis for the term of the contract. If the expiry date occurs before the annuitant dies, however, that individual no longer receives a steady income stream. |
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Term
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Definition
| A kind of annuity contract that allows the owner to allocate the premium amount among several investments, or sub-accounts. The contract value of such a plan may vary according to the performance of these investments. |
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Term
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Definition
| A penalty imposed by the insurer if the contract owner cashes out part of the annuity prematurely. Withdrawl charges typically phase out according to a schedule, e.g., 10% before 3 year, 5% after 4 years, 0% after 5 years. Withdrawl charges may be waived in the event of death or illness. |
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