Plain-English definitions for the terms you'll encounter on your financial journey.
A financial product that pays out a fixed stream of payments to an individual, typically used as a primary source of income for retirees.
An investment that provides a set number of payments for a fixed period of time regardless of how long the investor lives.
A multiplier used by insurers to determine the amount of a regular payment based on interest rates and age.
A sales charge or commission that an investor pays when withdrawing money from an investment or annuity.
The payment made to a designated beneficiary from an annuity or retirement plan when the original owner passes away.
An insurance contract that accumulates earnings and delays the start of income payments until a future date chosen by the owner.
A contract with an insurance company that guarantees a minimum interest rate and a fixed, predictable payment amount.
An insurance contract that pays interest based on the performance of a market index while protecting the principal from market losses.
Grantor Retained Annuity Trust is a legal arrangement where you transfer assets into a trust for a set time while keeping an income stream, which helps minimize taxes when passing wealth to heirs. It is essentially a way to move your investments to your children while locking in current tax values to avoid future gift tax hits.
An insurance product purchased with a single payment that begins paying out income to the owner almost immediately.
Joint and Survivor Annuity — A payment option that provides income for life to the retiree and continues to provide payments to a surviving spouse after the retiree's death.
An annuity contract that provides guaranteed payments for the entire life of the annuitant but stops immediately upon their death.
A type of deferred annuity designed to provide payments late in life, often starting at age 80 or 85.
An annuity that guarantees payments for a specific number of years, regardless of whether the owner lives or dies.
A Qualified Longevity Annuity Contract is a type of retirement insurance policy that you buy now to provide a guaranteed monthly income starting when you reach a very old age, like 85. It acts like a financial safety net to ensure you do not run out of money if you live much longer than expected.
An annuity that provides regular payments for as long as the retiree is alive, but all payments stop when they die.
A fee charged by an insurance company if an annuity owner withdraws money before a specified period has passed.
An insurance contract where the value of the account and the payment amounts vary based on the performance of underlying investments.