Every annuity term you'll encounter—explained clearly, honestly, and comprehensively.
The period when your money grows in the annuity before you start taking income. During this time, earnings are tax-deferred.
The person whose life the annuity payments are based on. Usually the owner, but can be different (like in a pension for a spouse).
The process of converting your annuity's lump sum into a stream of income payments. Once annuitized, you typically can't access the principal as a lump sum.
The maximum interest you can earn in a given period in a FIA. If the cap is 11% and the index gains 15%, you only get credited with 11%.
An optional feature that increases your income payments annually (typically 2-3%) to keep up with inflation. Reduces initial payment but protects purchasing power.
How the insurance company calculates interest in a FIA or RILA. Common methods: annual point-to-point, monthly average, or daily average.
The minimum return guaranteed. FIAs have a 0% floor—you can't lose money even if the market crashes. RILAs have negative floors (the buffer limit).
The amount you can withdraw annually without surrender charges, typically 10% of the account value. Doesn't mean "tax-free"—just "penalty-free."
In FIAs, the percentage of index gains you receive. A 125% participation rate means if the index gains 10%, you get 12.5% (subject to cap).
In immediate annuities, the percentage of your lump sum you receive annually. An 8% payout rate on $250K means $20,000/year or ~$1,667/month.