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fixed annuities

Glossary Terms

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.

Deferred Income Annuity

Also referred to as a Longevity Annuity, it is a product designed to provide a guaranteed lifetime income stream beginning at a predetermined future date, from a few years and up to 40 years in some cases. Usually, the income... Read more

Individual Retirement Account (IRA)

A tax-deferred retirement plan that is established by individuals who have earned income. Optional contributions can be made annually, up to a set maximum amount, and may be tax deductible depending on the individuals income, tax filing status and coverage... Read more

AM Best

An insurance company rating agency that assigns one of 15 letter based grades (from A++ to F) indicating their opinion with regard to the insurers financial strength and ability to pay claims.

Certificate of Deposit (CD)

A savings certificate issued by a bank or credit union that guarantees a set interest rate for a predefined period of time, typically three months to five years.

Point-to-Point

An index annuity crediting method that measures the percentage change in the underlying index value between two dates to determine the amount of interest credit applied to the contract.

Monthly Averaging

An index annuity interest crediting method that is calculated by comparing the underlying index value on the first day of the contract year to the monthly average of that same index at the end of the year. The monthly average... Read more

Flexible Premium

A kind of annuity contract that allows periodic additional premium deposits. After establishing the annuity with an initial deposit, further premium can be added to the policy at later dates.

Split Funded Annuity

An annuity concept where the initial premium is divided between two separate annuity contracts, structured in such a way as to produce immediate tax-advantaged income for a guaranteed period of time and to restore the original principal at the end... Read more

AM Best Rating

A letter grade (from A++ to F) assigned by globally recognized A.M. Best Rating Services to indicate their opinion with regard to the issuing insurance company’s financial strength and ability to pay claims.