Accumulation Value
The total current value of a fixed annuity, including all the premium payments made plus accumulated interest earnings to date, less any fees or previous withdrawals, but before the application of any surrender charges.

Agent
An individual licensed by a state and contracted with one or more insurance companies to sell their annuity products.

Annuity
A contract that offers income for a specified period of time or duration of life for a person or persons in exchange for a lump sum or series of premium payments.

Annuitization
The process of converting an annuity contract’s value into a guaranteed income stream is represented by periodic payments made over a specified period of time, usually for life.

Basis Point
A unit of measure for interest rates where one basis point is equal to 1/100th of 1%, or 0.01%.

Beneficiary
The individual(s) or legal entity named to receive the benefits of an annuity policy upon the death of the annuitant, typically a spouse or children.

Cap
An upper limit, used with some fixed indexed annuity crediting methodologies, on the index-linked interest rate applied to the annuity in a given year. The cap is the maximum rate of interest the annuity can earn during the index term.

Cash Refund
A type of immediate annuity payout option where the insurance company guarantees that the total payout will not be less than the amount paid to purchase the annuity. If the annuitant dies before receiving payments that equal the purchase price, the difference is paid to the named beneficiaries in a lump sum.

Comdex Rating
A ranking composite of all of the ratings an insurance company has received from A.M. Best, Standard & Poor’s, Moody’s, and Fitch. It gives the company’s standing, on a scale of 1-100, in relation to all other companies that have been rated by the rating services. A company needs to be rated by at least two rating services to receive a COMDEX.

Contract Owner
The person or legal entity that applies for and buys an annuity contract. This is the party that owns the annuity and whose funds were generally used to purchase the policy.

Cost Basis
The collective total of your initial premium payment(s) and any subsequent premium payment(s) paid to purchase an annuity.

Death Benefit
The benefit paid to the designated beneficiary(s) when the annuity contract’s annuitant dies.

Exclusion Ratio
It is that portion of an annuity income payment, represented as a percentage, considered a return of premium (cost basis) and, therefore, generally not taxed (for non-qualified annuities).

Fixed Account Rate
The current interest rate is applied to the premium allocated to the fixed account for fixed annuities. This interest rate is generally adjustable annually after the first year by the insurance company.

Guarantee Period
The period of time for which the declared interest rate is guaranteed.

Guaranteed Minimum Surrender Value
The minimum amount defined in the annuity that the contract owner is guaranteed to receive upon surrender of the annuity after the application of surrender charges and market value adjustments (MVA), if any.

Income Account Value
The value is used to determine the amount of guaranteed lifetime income that you will receive once activating that feature on an annuity with an attached income rider.

Income Rider
An optional benefit that can be added to some annuity contracts, usually for a fee, is designed to help generate a higher guaranteed lifetime income at a future date.

Installment Refund
A type of immediate annuity payout option where the insurance company guarantees that the total payout will not be less than the amount paid to purchase the annuity. If the annuitant dies before receiving payments that equal the purchase price, the difference is paid to the named beneficiaries in installments.

Joint Annuitant
A person whose life, jointly with the primary annuitant, the annuity policy is based upon and also receives the benefits of the contract.

Joint Life Annuity
An annuity payment option that provides guaranteed income payments for as long as either the annuitant or joint annuitant is living.

Life Annuity
An annuity payment option that provides guaranteed income payments for as long as the annuitant is living.

Maturity Date
The date specified within an annuity contract when the owner must elect a settlement option and begin receiving payments.

Minimum Premium
The minimum initial payment required to purchase an annuity or to qualify for a particular rate band. These amounts can vary by product design and tax status of funds.

Penalty-Free Withdrawals
The amounts specified in an annuity contract can be withdrawn on a penalty-free basis even when the annuity is subject to early surrender charges. (Income taxes will still apply, as well as a potential 10% IRS penalty for withdrawals before age 59-1/2).

Premium
The collective total of the initial payment, and any subsequent payments, made to purchase an annuity, excluding earned interest.

Premium Tax
A tax imposed by some states on certain annuity products. The amount of tax can vary depending on the type of funds (qualified or nonqualified) used to purchase the annuity and by state. Most insurance companies factor the tax, if any, into the pricing of their products, so the annuity purchaser is rarely even aware of its existence.

Renewal Rate
The interest rate offered by an insurance company on an in force fixed annuity after the initial guarantee period is over.

Required Minimum Distribution (RMD)
The amount that IRA owners and qualified plan participants must begin withdrawing from their retirement accounts the year after they reach age 73. RMD withdrawals must then be taken each subsequent year.

Surrender Charge
A penalty imposed by the insurance company for terminating or exceeding the penalty-free withdrawal provisions of an annuity contract during the surrender period. Also referred to as a Withdrawal Charge (see below).

Surrender Period
The period of time for which an annuity contract is subject to early surrender charges or penalties.

Withdrawal Charge
A penalty imposed by the insurance company for withdrawals made in excess of specified penalty-free amounts or full contract surrenders when the annuity is still subject to the surrender period. Also referred to as a Surrender Charge (see above). 

Withdrawal Window
The period of time, typically 30 days, at the end of an annuity guarantee period when the contract owner can withdraw or transfer funds or surrender their contract without any surrender charges or market value adjustment fees. Usually, if no action is taken, the annuity will generally renew for an additional guarantee period equal to the one just completed.

Yield
The total average annual interest rate percentage earned with a fixed annuity over a specified time period, including any premium bonus or interest rate enhancements.