Contract Fee

It is typically a flat fee charged by an insurance company to cover administration costs on a variable annuity. Generally it is between $20 to $50.

Contract Owner

The annuity contract is between the insurer and the contract owner. Contract owner is the person or entity who owns the annuity. Usually it is the initial investor.

Certificate Owner

Certificate owner is the purchaser of an annuity. A certificate owner can either be an individual or some other entity.

Compound Earnings

Any sum is subjected to interest after investment. That interest can either be withdrawn or re-invested in the principle amount to earn additional interest in the next cycle of interest generation. These earnings that accrue following such approach of reinvesting the interest earned in order to secure additional or excessive interest in the next cycle is called compound earnings.

Contingent Annuitant

Contingent Annuitant is the person who is designated to receive the payments from an annuity, in case of the death of the original annuitant prior to the beginning of annuity payments.

Contingent Deferred Sales Charge

A fee charged to the account of a deferred annuity or variable annuity upon the full surrender of an annuity contract. It can be also charged upon the withdrawal of funds in excess of annuity contract limits.

Death Benefit

A guarantee of payment of the annuity account value or a different, specified amount to designated account beneficiaries upon the early death of an annuitant or annuity contract holder, before the deferred annuity or variable annuity is annuitized. Almost all annuities have a death benefit, but the specifics vary from one product to the next. The IRS premature distribution tax is waived in the case of death for all annuities. Some variable annuities guarantee the greater of either the total premiums paid into the annuity or the account value of the annuity to the beneficiaries. Talk to our financial advisor to find out about product specific death benefits.

Deferred Annuity

Deferred annuity is an annuity that begins payments at some future date. Under a deferred annuity, the investment grows and compounds tax-deferred. Income, growth, and/or principal are withdrawn at some time in the future by the contract owner or heirs.

Diversification

Diversification refers to the deliberate mix of conservative and aggressive investments to reduce the risk inherent in investing. For example in a variable annuity, a method that helps an annuitant reduce or avoid risk by distributing funds over multiple asset classes, i.e., over stocks, bonds, or different security types within a given asset class.

Dividend

Dividend is a popular method of sharing a company’s profits with its stockholders. Generally, the board of directors of a company declares a dividend payable for each share of stock owned.