Annuity glossary
A clearer vocabulary.
Plain-language definitions for the terms you’ll encounter in a quote or contract.
- Account value
- The accumulated contract value before any applicable surrender charges or other exit adjustments.
- Annuitization
- Converting contract value into a payment stream under a chosen payout option. Access to the original value can change substantially.
- Benefit base
- A reference value used to calculate certain rider benefits. It may not be available as cash.
- Cap
- An upper limit used in an index-crediting formula for a defined period.
- Claims-paying ability
- The issuing insurer’s financial capacity to fulfill its contractual obligations.
- Death benefit
- The amount or payments available after a specified person dies, subject to the contract and payout option.
- Deferred annuity
- An annuity designed to begin income later rather than immediately.
- Free-look period
- A limited period to review a newly received contract and exercise cancellation rights under applicable terms and law.
- Income rider
- An optional contract feature that can provide withdrawals under stated conditions, often for an additional fee.
- Joint life
- A payout arrangement tied to two lives; survivor percentages and conditions vary.
- Market value adjustment
- A contract adjustment that can increase or decrease the value received on certain withdrawals or surrenders.
- MYGA
- A multi-year guaranteed annuity, with a stated rate guaranteed for a specified period.
- Participation rate
- The portion of an index change used by a crediting formula. It is not necessarily the final interest credit.
- Payout rate
- Annual income as a percentage of the relevant premium or benefit base. It is not the same as interest earned.
- Period certain
- A specified payment period that can protect continued payments under the chosen payout option.
- Premium
- Money paid into an insurance contract.
- Rider
- A feature added to a base contract with its own terms and potentially an additional cost.
- Surrender charge
- A charge that may apply when withdrawing or ending a contract during a stated period.
- Surrender value
- Cash available on surrender after applicable charges and adjustments.
- Tax deferral
- Postponement of tax recognition under applicable rules. It does not mean the money is permanently tax-free.
Terminology summaries informed by SEC Investor.gov. Your contract controls the precise meaning.