Financial or Investment Advisor

An organization or individual that provides professional advice on a wide range of investments including annuities.

Fixed Deferred Annuity

It is a type of deferred annuity that offers a fixed rate of interest that is guaranteed for a specific period of time.

Flexible Premium Deferred Annuity

An annuity contract that permits varying the amount and frequency of premium payments from year to year for payouts that will occur in the future. It is often used for individual retirement accounts.

Forced Annuitization

Forced annuitization occurs when an annuity contract requires liquidation once the annuitant reaches a certain age. This age is typically 80 or 85 year.

Free Withdrawal

It is a common provision in most deferred annuities which permits the policyholder to withdraw a certain amount without incurring a surrender or withdrawal charge. The amount is typically up to 10% of their account value. Withdrawals are taxable, and may be subject to a tax penalty if taken before age 59½.

Guaranteed Death Benefit

Guaranteed death benefit is a term that guarantees that the beneficiary pre-specified in the contract, will receive a death benefit if the annuitant dies before the annuity begins paying benefits. The benefit received may differs among companies and contracts, but the beneficiary is guaranteed an amount equal to what was invested or the value of the contract on the most recent policy anniversary statement, whichever is higher.

Guaranteed Income

Guaranteed income refers to the minimum monthly or annual income payment that insurance company is bound to make when your annuity is annuitized.

Immediate Annuity

An annuity that begins to pay regular payments within the first year of purchase or an annuity for which the income benefit begins within one year period after the payment of a single premium.

This is the opposite to a deferred annuity in which the annuitant elects to take the annuity at a later date; an immediate annuity is taken immediately with no deferment.

Individual Retirement Account (IRA)

It is a personal, tax-deferred retirement account that an individual can establish and fund with earned income up to a maximum amount. Deposits of up to a maximum of $2,000 per year may be deductible within prescribed income levels and retirement plan participation. Income earned from IRA is tax deferred until it is withdrawn.

Interest Rate

Interest rate is known as the percent of interest earned on funds which is deposited in an annuity. The interest rate offered in an annuity is generally guaranteed for one or more years.