Annuity Glossary. Clear Definitions. More Confident Decisions.

The period during which a deferred annuity may build contract value through interest credits or investment performance before annuitization.

The contract's value under its accumulation provisions. It may differ from the cash surrender value or an income benefit base.

An insurance contract that may provide interest accumulation, payments, or other contractually defined benefits in exchange for premium payments.

The person whose life may be used to determine an annuity's income benefits. The annuitant is not necessarily the contract owner.

The contractual process of converting eligible annuity value into scheduled income payments according to a selected payout option.

A date used under applicable contract and tax rules in connection with the commencement of annuity payments. Its precise meaning can depend on context.

An administrative or insurance-related charge assessed annually under certain annuity contracts. Not every annuity has an explicit annual fee.

A contractual calculation amount used for certain rider benefits, often lifetime withdrawal benefits. It generally is not the same as cash surrender value or an amount available for withdrawal.

A person or entity designated to receive available benefits after an applicable death, subject to the contract and ownership rules.

In certain registered index-linked annuities, a provision under which the insurer absorbs a specified portion of negative index performance. Losses beyond the buffer may be borne by the owner.

A maximum credited interest rate under a specified index-crediting strategy for its stated measurement period. The insurer may be permitted to change caps at renewal.

The amount available upon full surrender after applicable surrender charges and contractual adjustments. It may differ from the accumulation value.

The issuing insurer's financial capacity to meet its contractual obligations, including annuity guarantees.

The minimum interest credit under a designated strategy for a specific crediting period. A zero-percent index-crediting floor does not eliminate surrender charges, fees, or insurer risk.

The formula or contractual method used to determine interest credited to the annuity, such as an annual point-to-point index strategy.

The period over which a specified rate or indexed crediting calculation applies before the next crediting event or renewal.

A contractually defined amount or benefit potentially payable after death to eligible beneficiaries. Availability and amount vary by contract and payout election.

An annuity designed to begin contractually scheduled income payments at a future commencement date.

An annuity in which income payments are deferred. Some deferred annuities accumulate value and offer later income elections; deferred income annuities establish future payments.

A general tax rule for many nonqualified deferred annuity withdrawals before annuitization: taxable gain is treated as distributed before after-tax investment in the contract. Exceptions exist.

A method used under applicable IRS rules to determine the portion of certain nonqualified annuitized payments treated as recovery of investment in the contract rather than taxable income.

An insurance annuity with fixed-interest or fixed-payment provisions and specified insurer guarantees, subject to contractual conditions.

A fixed annuity that calculates potential interest credits using a formula linked to an external index. Contract value is not directly invested in the index.

A contract provision allowing specified withdrawals without the ordinary surrender charge, subject to timing and eligibility rules. Taxes and rider consequences may still apply.

A rider on certain deferred annuities providing qualifying lifetime withdrawal benefits under stated rules. Charges and restrictions may apply.

A contractual minimum interest provision under certain fixed annuities. It should not be confused with an advertised initial or renewal rate.

An annuity generally purchased with a lump sum that begins scheduled income payments relatively soon after purchase, ordinarily within one year.

A benchmark measuring specified market performance. In an FIA, the index serves as a reference for calculating potential interest rather than a direct investment.

The contractual measurement period for an indexed crediting strategy, such as one year or another stated interval.

A tax concept generally reflecting unrecovered after-tax amounts paid into an annuity, subject to applicable adjustments and IRS rules.

An additional contract feature that may provide specified withdrawal or income benefits, often subject to eligibility conditions and fees.

An income payout election based on two covered lives, potentially continuing payments while either eligible person remains alive under the elected terms.

An annuity payment arrangement that generally provides payments for the lifetime of the applicable covered person, subject to its payout election.

A lifetime income election that also provides a minimum guaranteed payment period under the stated contract conditions.

The ability to access financial value when needed. Annuity liquidity can be restricted by surrender terms, benefit elections, or product structure.

A contract-defined adjustment that may increase or decrease applicable account values or surrender proceeds under specified conditions.

An insurance-related charge commonly found in variable annuity contracts, intended to compensate the insurer for specified insurance risks and obligations.

A fixed deferred annuity offering a specified interest rate for a stated multiyear guarantee period, subject to contract restrictions.

An annuity generally owned outside a qualified retirement account and commonly funded with after-tax funds. Distributions follow applicable annuity tax rules.

The person or entity holding the contractual ownership rights, subject to ownership restrictions and applicable law.

The proportion of an eligible index change used in a specified index-interest crediting calculation. Other contractual limits may also apply.

The period in which the annuity provides payments under an elected income arrangement.

A payment election that guarantees payments for a stated number of years according to contract terms, potentially continuing to beneficiaries if death occurs during that period.

The payment made to purchase or fund an annuity contract, subject to the product's funding provisions.

An indexed crediting method that measures the index change between designated starting and ending points in a crediting period, then applies the contract formula.

An annuity held in a qualifying tax-advantaged retirement arrangement, such as an IRA or certain employer plans. Taxation follows the applicable arrangement's rules.

A deferred income annuity meeting specific federal retirement-account requirements that can receive special treatment under applicable required minimum distribution rules.

A registered annuity with returns linked to an index under specified gain limits and loss-sharing provisions. It can experience market-related losses and differs from a fixed indexed annuity.

A rate or crediting parameter applicable to a new contract period. Depending on product terms, it can differ from the initial rate.

An amount that must be distributed from certain retirement accounts under applicable federal rules once relevant requirements apply. Exceptions and special annuity rules can affect calculations.

An available payout feature in certain annuities that can provide an eligible refund or continuing payment benefit if the covered person dies under stated conditions.

An additional provision attached to an insurance contract. Riders can modify benefits or conditions and may have associated costs.

A contract provision or applicable benefit permitting an eligible surviving spouse to continue certain contract rights or benefits after death, subject to specific rules.

A stated percentage subtracted from an eligible index change as part of certain interest-crediting formulas. The effect depends on the whole formula.

A contractual charge that may apply when a withdrawal exceeds allowed amounts during a stated surrender period.

The contractually defined time during which applicable withdrawals or surrender may trigger surrender charges.

The postponement of current taxation on eligible earnings until a later taxable event, typically a distribution. Tax deferral does not mean tax exemption.

An amount paid from an annuity that is included in taxable income under applicable rules. Whether all or part is taxable depends on the contract and circumstances.

An annuity whose value can fluctuate with underlying investment options. Variable annuities can involve market losses and typically have investment-related costs.

A contractual benefit governing specified withdrawals. Guaranteed lifetime withdrawal benefits have separate rules from ordinary penalty-free withdrawal provisions.

A stated percentage used in determining certain permitted rider withdrawals, often in conjunction with a benefit base and eligibility conditions.

A transaction meeting Internal Revenue Code Section 1035 requirements that may permit an eligible annuity-to-annuity exchange without immediate recognition of gain. Contract charges and replacement risks remain possible.