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Annuity For Retirement Glossary

As you look forward to comfortable years in retirement, it is important that you have a good grasp of terms associated with annuities for retirement purposes. Get a deep understanding of these terms and compare rates from different annuity providers using our comparison tool.

•             1035 Exchange: this is the term used to describe a transfer of annuity from one insurance company to another. Investors often use this exchange in order to get a plan that works best for their retirement needs. It is usually tax-free but to successfully change plans, the contact owner and contract terms in the old and new contract must be the same. However, surrender fees might be charged if the investor makes an exchange before the date initially agreed upon in the contract. It is usually a percentage of the principal amount deposited.

•             401K: is a retirement savings plan that is sponsored by the employer. This plan allows the employees to keep back a part of their income to be invested in an annuity plan of their choice before their tax is deducted.

•             Accumulation Phase: is a time-period in which an annuity owner can add more money to his principal investment if he desires.

•             Annuitant: is the term used to describe an individual who invests in an annuity plan and makes withdrawals from it according to the terms of the annuity contract.

•             Annuity: is a term used to describe the payments that are made to an annuitant under an annuity plan.

•             Annuitization: is a term used to describe the conversion of the value of an annuitant plan into an income stream that can be paid out periodically or as a lump sum after a period of time.

•             Annuity Contract: this refers to a legal document that contains the terms and conditions of an annuity plan which is binding on both the insurance company and the annuitant.

•             Beneficiary: is an individual that benefits from an annuity plan in the eventuality of the death of the original annuitant. It could be a family member or a loved one.

•             Certificate of Deposit (CD): Is a certificate that is usually issued by banks when you deposit a principal sum of money. The principal amount with interest can be withdrawn after a specified period of time.

•             Contract Owner: refers to an individual or entity that buys an annuity plan and funds it.

•             Contract Termination: This is a term that refers to the termination of an annuity plan in the eventuality of the death of the annuitant.

•             Deferred Annuity: refers to a type of annuity that does not payout immediately but takes a longer period of time before it is due for payment by the insurance company. The taxes are deferred until the annuitant makes a withdrawal.

•             Fixed Annuity:  refers to a type of annuity plan in which the rate of return is guaranteed. Fixed annuities can either be immediate or deferred.

•             Guaranteed Interest Rate: is the interest rate that is paid by an insurance company to an investor under the fixed annuity plan. This sum is not subject to market instabilities. It is usually between 3 -4%

•             Immediate Annuity: This refers to a type of fixed annuity in which the annuitant can immediately begin to make withdrawals after a short period of time, say one month.

•             Joint Annuitant: Refers to a person who is named alongside with the contract owner in an annuity plan. This person’s age, and other data are factored in when making calculations to determine payments in that particular annuity contract.

•             Payout Period: This refers to the time period during which an annuitant can receive payments under an annuity plan.

•             Surrender Charge: is a charge that is deducted when an annuitant decides to switch annuity plans before the originally agreed date as stipulated in the initial annuity contract.

•             Tax-Deferral: Describes a situation where monies invested into an annuity are not taxed until withdrawals are made after a period of time.

To get started, enter your zip code on the top of this page and then answer some basic questions. This will help you to compare annuities for retirement plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual circumstance and situation.