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>  Receive Stable, Monthly Income forLife
 >  Limit Market Risk & Retire with Confidence
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Every business venture has the basic knowledge that helps investors succeed in such ventures. When you are buying a fixed annuity, you need to understand what different financial terms mean. This way, you will be able to understand the contract between you and the financial firm. Consequently, you will know what you will be signing and you will avoid making some grievous mistakes during the investment period. These can lead to some undesirable tax penalties.

Listed below are some of the terms that you will find in an annuity contract.

Two-tier annuity – This is a category of the annuities. It usually provides relatively attractive interest rates, which are usually much better than the stock markets are performing. The firms that provide these options usually work with the idea that the person buying the insurance will not terminate the contract prematurely.

Tax sheltered annuity – Some annuities have restrictions on who can buy them and this is one of these annuities. The people who can purchase this policy are teachers in public schools, college employees, hospitals’ staff and anyone else who is mentioned in the section 403b of internal revenue code.

Temporary annuity – Different annuities last for varying periods but most people are aware of the lifetime annuities. However, a temporary annuity expires at a date that is usually predetermined.

Term certain annuity – If you invest in this scheme, you will receive regular monthly income for a specified time. Once this time is up, you will no longer continue to receive such payments from the insurer.

Trustee – There are organizations and individuals who always have the responsibilities of being able to receive, manage and distribute plan assets.

Tax free transfer – There times which might necessitate the change of an annuity from one account or scheme to another. When you do this under the regulations that exempt you from any tax penalties, then the process is referred to as a tax-free transfer.

Tax deferral – This is one of the features of a fixed annuity. It means that any interest earned by your principal deposit will not be taxed in any way up to the time that you start withdrawing the interest.

Surviving spouse – When an annuitant passes on, there is a current partner or a former partner who is bereaved. This partner is the surviving spouse. He or she might be needed if mentioned as a beneficiary in the contract.

Surrender value – When the person who buys an annuity was to withdraw all the money in an annuity, there is the amount that he would receive. That receivable amount is the surrender value.

Surrender charge – A fixed annuity has regulations that bar people from withdrawing money from the schemes during the accumulation durations. However, if someone has a pressing need there might be the need to make this withdrawal. Consequently, this person has to pay a penalty for withdrawing all the funds. This penalty is referred to as the surrender charge.

Split funded annuity – This is an investment scheme that provides buyers of the scheme some flexibility. Whenever you deposit some money into an investment account for this scheme, your principal is divided into two. One half funds a fixed option of annuities and earns interests without any tax payment. The other half funds an immediate annuity for you. Consequently, you will be earning interest from the former half while receiving payments from the latter half and this will happen simultaneously.

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