Education

Annuities can be a bit complex to understand at times. We want to make it simpler, by providing you with articles, videos, and graphics to help keep you informed.

Hero Image Hero Image

What’s new?

What’s new?

This Too Shall Pass

Dwan Tabor, Director of Learning and Development 2 min read
Dwan Tabor 2 min read

Today’s unexpected COVID-19 pandemic is nothing to take lightly, but the reality is that the unexpected is here and we need to adjust. Since my background is in financial planning, I’ll leave the healthcare advice to washing your hands, and practicing social distancing. However, when it comes to financial impact, the effect of this pandemic does warrant me to share a few thoughts.

Top Reads

The Importance of
Beneficiaries

We’ve all chosen beneficiaries at some point, for insurance provided through work, deeds of trust, or similar documents. While it may be tempting …

3 min read

Assessing Your Company’s Talent with the Culture Index Survey

Interested in scaling up your insurance business? Want to build your client base? Sure, you do. You could be spinning your wheels though, if …

5 min read

How to Use Financial Analysis in Your Business

Interested in scaling up your insurance business? Want to build your client base? Sure, you do. You could be spinning your wheels though, if …

6 min read

Financial Planning

Financial Image
Financial Image

Financial Planning at Every Life Stage

Dwan Tabor, Director of Learning and Development 2 min read
Dwan Tabor 2 min read

Growing up, most of us learned basic life skills: job interviewing, how to use a checkbook, buy a car, make friends, play nice, and of course the Pythagorean Theorem. I, myself, can’t wait to use it someday. But one skill that is often overlooked is how to formulate a financial strategy that is best for you. It must be a needed skill because an entire industry has been built around teaching the public how to create sound financial strategies. Magazines, newsletters, videos, apps, when in reality the best source to learn it from is you, yourself.

Videos

Dig-In 2019 Recap 3 min watch

Taylor Casey, Digital Experience Leader, recaps going to the Digital Insurance conference in Austin, Texas in 2019 and shares her major takeaways.

Dig-In 2019 Recap

3 min watch

Taylor Casey, Digital Experience Leader, recaps going to the Digital Insurance conference in Austin, Texas in 2019 and shares her major takeaways.

The Glossary

  • Administrative Office

    The address for submitting all correspondence to the insurance company.

  • Annuity

    An Annuity is a Contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You either pay a single upfront premium or make a series of premium payments (a.k.a. your principal) and then earn interest on that money. Similarly, your payout may come either as one lump-sum payment or as a series of payments over time.

    Annuities are long-term investments designed to help your retirement in two vital phases: accumulation and distribution. It’s important to discuss with your financial professional if this is an appropriate option for you. For some, it can work great. For others, it’s not the best fit. That’s why we encourage you to understand how they work and what your options are.

  • Annuitant

    An Annuitant is the Natural Person on whose life expectancy is used to set the dollar amount of future annuity income. You name your Annuitant during the application process. In the case of Joint Owners, the younger Joint Owner will be designated as the Annuitant. The Contract Maturity Date will be based on the Attained Age of the Annuitant.

  • Annuitization

    Annuitization is the process of converting an annuity investment into a series of periodic income payments. Annuities may be annuitized for a specific period or for the life of the Annuitant.

  • Attained Age

    The age of the Natural Person involved on his or her previous birthday.

  • Beneficiary

    Beneficiary refers to all persons named as Beneficiaries on the application. You may name a new Beneficiary or change a Beneficiary after your Contract is issued. If the Owner or Annuitant dies before annuity payments begin, generally, the Beneficiary is the one who may have the right to receive the death benefit.

  • Contract Anniversary Date

    The annual anniversary of a Contract Effective Date for every year a Contract is in force.

  • Contract Effective Date

    The time, day, month, and year when your Annuity Contract goes into effect. Contract Year and Contract Anniversaries are computed from this date.

  • Contract Maturity Date

    This is the Contract Anniversary Date in the year following the date that the Annuitant reaches the Maturity Age. The Contract Maturity Date is the date on which income payments begin through an Annuitization Option.

  • Contract Value

    The total value of your Annuity Contract.

  • Contract Year

    Each period of twelve (12) months beginning on the Contract Effective Date and each Contract Anniversary Date.

  • Free Withdrawals

    Any withdrawal option that allows money to be withdrawn from a Contract without any Withdrawal Charge. The allowance will differ from carrier to carrier, but it’s often cumulative interest or 10% of the account balance. You should only plan to take advantage of these withdrawals if you’re at least 59½, as the IRS imposes a 10% penalty on withdrawals made before you reach that age. Note that if your fixed annuity is qualified and was purchased within a 401(k) or IRA, any applicable required minimum distributions will be withdrawable penalty-free.

  • Fixed Index Annuity (FIA)

    A Fixed Index Annuity (known for its tax-deferred benefits) is a contract between you and an insurance company that provides a guaranteed minimum interest rate, tax-deferred growth, and guaranteed payments through Annuitization in retirement. This unique combination of benefits can make FIAs an ideal low-risk component of your long-term retirement plan.

    FIAs are a type of fixed annuity that earns interest, in part, based on changes in a market index, which measures how the market or part of the market performs. All guarantees are based on the claims-paying ability of the issuing insurance company.

    The potential for interest credited to the Contract is affected by changes in the index over the crediting period and isn’t affected by the index directly. Even though changes in the index affect the index interest credited to the Annuity Contract, a fixed index annuity is not an investment in the stock market and does not participate in equities, commodities, fixed income, or currencies.

  • Interest Rate Guarantee Period

    The initial guarantee period that begins on the Contract Effective Date.

  • Initial Guaranteed Interest Rate

    The interest rate the insurance company guarantees for the Interest Rate Guarantee Period. The Initial Guaranteed Interest Rate is credited during the Interest Rate Guarantee Period.

  • Joint Annuitant

    If two people are named as Annuitants, each Annuitant will be a Joint Annuitant. In the case of Joint Annuitants, any reference to the Annuitant’s age will mean the age of the youngest Joint Annuitant. On the death of a Joint Annuitant, during Annuitization, the surviving Annuitant will become the sole Annuitant and the annuitization will continue as previously elected under the chosen Annuitization Option.

  • Joint Owners

    If two people are named as Owners, each Owner shall be a Joint Owner. Either Joint Owner can make decisions about the Annuity, such as how much money to put into the Contract.

  • Market Value Adjustment (MVA)

    When you take a withdrawal in excess of any free amount during the withdrawal charge period, the amount you receive may be increased or decreased by a Market Value Adjustment (MVA). If the market index interest rates are higher than when you purchased the annuity, the MVA amount will be negative, decreasing your withdrawal amount and/or annuity balance. If market index interest rates are lower than when you purchased the annuity, the MVA is positive, increasing your withdrawal amount and/or annuity balance. The MVA does not impact Annuitization Options or the Minimum Guaranteed Surrender Value.

  • Multi-Year Guaranteed Annuity (MYGA)

    A Multi-Year Guaranteed Annuity (MYGA) is a contract between you and an insurance company. A MYGA is a type of fixed annuity. That means it applies a guaranteed interest rate over multiple years. It is designed to address long-term financial goals rather than immediate or short-term needs.

  • Natural Person

    A human being.

  • Non-Natural Person

    A corporation, entity, trust or other legal entity other than a Natural Person.

  • Owner

    The person, persons, or entity named at the time of application is the Owner of a Contract, unless subsequently changed. As an Owner, you make decisions about the Annuity, such as how much money to put into the Contract.

    The Owner also names the Annuitants and Beneficiaries. If the Owner is a Non-Natural Person, a Natural Person must be named as the Annuitant. If the Owner is a grantor trust, the trust grantor, if living, must be the Annuitant.

  • Partial Withdrawal

    A Withdrawal of an amount that is less than the total Contract Value.

  • Recipient

    Any party (or parties) who receives any proceeds under a Contract.

  • Required Minimum Distribution (RMD)

    A Required Minimum Distribution is the amount of money that must be withdrawn from qualified plan participants of retirement age. As of 2020, participants must begin withdrawing from their retirement accounts by April 1 following the year they reach 72.

  • Surrender

    The Withdrawal of the Cash Surrender Value of the Contract, thereby terminating a Contract.

  • Surrender Period

    The Surrender Period is the amount of time an investor must wait until he or she can withdraw funds from an Annuity without facing a penalty. Surrender Periods can be many years long, and withdrawing money before the end of the Surrender Period can result in a surrender charge, which is essentially a deferred sales fee. Generally, but not always, the longer the surrender period, the better the Annuity’s other terms.

  • Systematic Withdrawals

    A Systematic Withdrawal schedule is a method of withdrawing funds from an Annuity account that specifies the amount and frequency of the payments to be made.