Annuity - ANSWER insurance against the risk of outliving one's financial resources
annuity contract - ANSWER A contract under which an insurer promises to make a series of periodic payments to a named individual in exchange for a premium or a series of premiums.
contract owner - ANSWER The pe...
Annuity - ANSWER insurance against the risk of outliving one's financial resources
annuity contract - ANSWER A contract under which an insurer promises to make a series of periodic
payments to a named individual in exchange for a premium or a series of premiums.
contract owner - ANSWER The person or other entity who owns and exercises all the rights and
privileges of an annuity contract.
annuitant - ANSWER The person whose lifetime is used to determine the amount of benefits payable
under an annuity contract. If not the contract owner, they are not a party to the contract.
payee - ANSWER The person or entity who receives the periodic income payments according to the
terms of an annuity contract. If not the contract owner, they are not a party to the contract.
beneficiary - ANSWER The party designated to receive the policy proceeds following the death of the
insured. Also known as first beneficiary.
, accumulation value - ANSWER equals the premiums paid, plus investment earnings, less withdrawals or
fees.
fixed annuity - ANSWER An annuity contract under which the insurer guarantees the minimum interest
rate that will be applied to the annuity's accumulation value during the accumulation period and the
minimum amount of the periodic income payments that will be made during the payout period.
variable annuity - ANSWER An annuity under which the amount of the accumulation value and the
amount of the periodic income payments fluctuate in accordance with the performance of one or more
specified fund options. Contract owner assumes most or all of the risk.
hybrid annuities - ANSWER combine features of fixed annuities and variable annuities.
fixed-indexed annuity - ANSWER offers principal and interest rate guarantees, as well as the possibility of
additional earnings based on changes in a published index, such as the Standard & Poor's 500 Composite
Stock Price Index (the S&P 500)
surrender value - ANSWER The accumulation value of a deferred annuity less any surrender charges
included in the contract.
surrender value - ANSWER A fee typically imposed if a deferred annuity contract is surrendered within a
stated number of years after it was purchased. Also known as back-end sales charge and contingent
deferred sales charge.
front-end sales charge - ANSWER An amount charged to an annuity contract owner at the time of sale.
The front-end charge compensates the insurer for sales commissions and other expenses associated with
acquiring the business.
back-end sales charge - ANSWER An amount charged to an annuity contract owner when money is
withdrawn from a contract. Also known as surrender charge.
periodic fee - ANSWER An amount charged the owner of an annuity contract at predetermined intervals
—for example, every year or every month. A periodic fee typically compensates the insurer for its
administrative expenses. Also known as maintenance fee.
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