Indexed
An indexed annuity usually provides a guarantee on your investment as well as a prospective market index. Some contracts, for example, protect you from losing money while giving growth potential through a market index such as the S& P 500. If the index performs well during specific periods, you may profit to a limited extent from those gains and earn slightly more in your annuity.
Single-Premium
A single-premium annuity requires only one premium payment into the contract. When you buy an immediate annuity, for example, you pay a flat sum and immediately begin receiving income.
Flexible-Premium
You can add cash to your annuity several times with flexible-premium contracts. For example, you might set up monthly premium payments or pay a flat sum at the end of each year (or whenever you choose). The more you put in, the more you could potentially have later, based on your contract’s gains or losses.
Rider
A rider is an additional feature that can be added to an annuity contract. Riders may include characteristics such as growth guarantees, income guarantees, enhanced death payments, and other perks. Riders are not available with all annuities, and they usually come at an additional cost, so consult with a financial representative to establish which riders are appropriate for you.
Annuitize
Annuitization is the process of converting assets in your annuity contract into a stream of regular payments. This could be for a set amount of time, or it could be paid out throughout your life.
Certain Period
If you are afraid of dying soon after annuitizing, you can specify a time frame. Regardless of when you die, the insurance provider pays you or your beneficiaries during that time.
You may, for example, select 10 years. If you die within the first year of annuitization, your dependents will continue to receive payments for the next nine years.
Phase of Payment
An annuity contract pays out income on a monthly, yearly, or other schedule specified in the contract during the payout phase. For example, payments may be made for the rest of your life or a certain period of years.
Subaccount
A subaccount is an investing option accessible in a variable annuity contract. These options may have varying risk and return characteristics, allowing you to select an investment plan that best meets your requirements and objectives.
Charge of Surrender
A surrender charge is a fee levied by insurance companies to dissuade you from withdrawing funds from certain types of annuities soon after obtaining them. The amount you pay is usually a percentage of your withdrawal, and surrender charges are frequently reduced over time until they are completely abolished.
Period of Surrender
The surrender term is a set number of years during which you must pay a surrender charge if you withdraw too much from an annuity contract. Not all annuities include surrender periods, ranging from four to ten years.
Beneficiary
- After your death, the beneficiary receives the assets in your annuity. By naming a beneficiary, you may be able to speed up and simplify the process of transferring assets.