Beneficiary A person or trust designated in the contract to receive payments due in the event of the death of the owner or defendant. Instant annuity An annuity earned at a single premium for which income payments begin within one year of the contract date. In the case of fixed immediate annuities, the payment is based on a fixed interest rate. In the case of variable immediate annuities, payments are based on the value of the underlying investments. Payments are made for the lifespan(s) of the year, for a specific period of time, or for both (e.g. 10 years security and lifespan). Premiums Amounts of money paid into a pension contract. Also known as purchase payments. A non-qualifying pension is a pension acquired separately or „outside” a tax-efficient pension plan. Capital gains from all qualified and non-qualified pension plans are deferred for tax purposes until they are received; At this point, they are treated as taxable income (whether from the sale of capital at profit or dividends). Guaranteed Payment for Lifetime (GLWP) A pension option that provides a certain percentage of a guaranteed benefit base that can be withdrawn each year over the life of the entrepreneur, regardless of market performance or actual account balance. In the case of a fixed annuity, the insurance company guarantees the principal and a minimum interest rate.

In other words, as long as the insurance company is in good financial health, the money you have in a fixed annuity will increase and will not lose value. The growth in the value of the annuity and/or benefits paid may be set at a dollar amount or interest rate, or it may grow according to a specific formula. The increase in the value of the pension and/or benefits paid does not depend directly or entirely on the return on investments made by the insurance company to support the pension. Some fixed annuities credit a higher-than-minimum interest rate via an insurance dividend, which can be explained by the company`s board of directors if the company`s actual investment, costs, and mortality are more favorable than expected. Fixed pensions are regulated by the State insurance authorities. An annuity can be divided into several of these categories at the same time. For example, a person can purchase a deferred variable annuity with a single non-qualifying premium. Minimum Guaranteed Lifetime Benefit (MGBP) A benefit that protects against investment risks by guaranteeing the amount of the value of accounts or annuity payments. There are three types: guaranteed minimum income benefits, guaranteed minimum accrued benefits, and guaranteed minimum withdrawal benefits.

1. Deferred annuities A deferred annuity is used to collect premiums and accumulate capital gains over a longer period of time that can be paid at a later date, such as when a person retires. Deferred annuities, also known as investment annuities, are available in fixed or variable form. Reverse annuity mortgage A reverse annuity mortgage is an arrangement in which a homeowner takes out loans on the equity in the home and receives monthly lifetime payments from the lender. A life annuity converts an investment into a cash flow that lasts until the death of the pensioner. In theory, payments come from three „pockets”: the initial investment, capital gains and money from a pool of people in the investor group who do not live as long as actuarial tables predict. Pooling is unique to annuities and allows annuities to guarantee lifetime income for annuities. Distribution Payment from a pension plan or annuity contract. See also capital distribution and pension. Subsidy rate Additional interest accrued in the first year of a deferred pension and added to the sum on the basis of which interest is calculated in subsequent years, also known as the subsidy rate for the first year.

Income or payment options Methods by which a policyholder can receive income from an annuity. These include lump sums, systematic withdrawals, living benefits and pension insurance. Variable annuity Insurance contract in which the buyer makes a lump sum payment or a series of payments. In return, the insurer undertakes to make regular payments immediately or at a later date. Purchase payments are directed to a number of investment options, which may be mutual funds, or directly to the segregated account of the insurance company managing the portfolios. The value of the account during accumulation and income payments after the annuity vary depending on the performance of the investment options chosen. Total turnover or total premium flow The sum of new sales (all first purchasers of a contract, including intra-firm exchanges) and additional premiums from existing policyholders. Application A form submitted by a life insurance company based on information received from the applicant.

The form is signed by the applicant and forms part of the insurance or pension contract. Redemption fees Fees incurred by a policyholder for withdrawals from the policy prior to the end of the redemption period. The return period is usually five to seven years. Pension Periodic income payable during the lifetime of one or more persons or for a specified period. A contract whereby an insurance company agrees to pay income for life or for a certain number of years. Deferred annuity The annuity contract during the period preceding the annuity. The policyholder determines when accumulated capital and profits are converted into an income stream. Cost Base The initial payment or premiums paid to an ineligible annuity are designated in the contract as a cost base. As it was previously taxed, the basic cost is not taxed when it is withdrawn. Initial charge One percent of the premium fees that insurance companies charge upon creation and each subsequent premium payment to cover the cost of creating new accounts. Called the share price A.

The money from a variable annuity is invested in a fund – like a mutual fund, but which is only open to investors in the insurance company`s variable life insurance and variable annuities. The fund has a specific investment objective, and the value of your money in a variable annuity – and the amount of money paid to you – is determined by the fund`s investment performance (less expenses). Most variable annuities are structured in such a way as to offer investors many different fund alternatives. Variable annuities are regulated by state insurance divisions and the Federal Securities and Exchange Commission. Variable annuities on shares L Variable annuity contracts, which usually have shorter redemption periods, such as three or four years. L-share variable annuities typically have higher mortality and cost (M&E) costs than B-share annuities. Effective annual return With a fixed deferred annuity, the annualized return is based on the daily composition and credit of the interest on the annuity. Guaranteed Investment Contracts (GICs) The Group enters into contracts with an insurance company at a fixed interest rate. Annuity purchase rate The cost of an annuity is based on insurance company tables that take into account various factors such as age and gender. Accumulation phase The period of a pre-annuity contract during which annuity holders can add money and accumulate tax-deferred assets. Private annuity A private annuity is an agreement whereby the client transfers ownership to an individual or company in exchange for a promise of fixed periodic payments for the remainder of the client`s life.

In the case of private pensions, the person or organization assuming the payment obligation is not in the business of selling annuities. Split annuities A split annuity is the combination of a single deferred annuity and a single immediate annuity. The immediate annuity pays an amount each month for a certain period of time. The deferred pension accumulates on a fixed interest basis. The aim is that in the event of exhaustion of the immediate annuity, the deferred pension will have restored the original capital. An ICRP study of the state of the life insurance industry indicates that the growth of individual pension plans in the mid-1980s resulted in insurers` entire product mix being almost evenly divided between annuity considerations and traditional insurance products. By the end of the century, annuity products had become so popular that their sales volume exceeded that of traditional life insurance.