Income Solutions® Annuity Glossary

Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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A.M. Best
A.M. Best is a Nationally Recognized Statistical Rating Organization (NRSRO) that evaluates the financial quality of institutions’ debt, the claims-paying ability of life insurers, and the deposit credit rating of banks.

Annual Percentage Increase
An option that can be purchased with an annuity that provides for an automatic yearly increase on the monthly income amount in the amount of the specified percentage. The cost of this option is reflected in the quotes provided by insurance companies. This option is not linked to inflation.

Annuitant
The person entitled to receive annuity income payments from the annuity.

Annuity
An annuity is a contract in which an individual agrees to pay a lump sum premium to an insurance company and receives, in exchange, a regular stream of income from the insurance company for life or for a specified number of years. Annuities are designed to protect against the risk of living longer than expected and outliving one’s savings.

Annuity Payout Period
The period of time during which money is paid out of an annuity. Examples are lifetime, 5, 10, 15, or 20 years.

Annuity Start Date (Commencement Date)
When purchasing an annuity through the Income Solutions® Annuity Program, the individual must specify the month that they want to begin receiving monthly payments from the annuity. The annuitant must begin receiving payments within 12 months from the date the annuity was purchased and must be the first day of a calendar month.

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Beneficiary
The person(s) designated by the annuitant to receive money upon the death of the annuitant and/or joint annuitant if death occurs before the end of the annuity term. The annuitant decides who the beneficiary will be and the beneficiary can generally be changed at any time.

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Deferred Annuity
An annuity contract where premiums are accumulated with investment experience and then used to provide periodic payments at a future date. The investment grows and compounds tax-deferred during the accumulation phase. Income Solutions® does not offer deferred annuity products.

Defined Benefit Plan
A retirement plan in which the sponsoring company provides a certain guaranteed benefit to participants based on a pre-determined formula.

Defined Contribution Plan
An employer-sponsored plan (401k, 403b, 457, etc.) by which contributions are made to individual participant accounts, and the final benefit consists solely of assets (including investment returns) that have accumulated in these individual accounts. Depending on the type of defined contribution plan, contributions may be made either by the company, the participant or both.

Direct Rollover
A transfer that qualifies as a rollover, but is done directly from one company to another. Usually, it is from a qualified retirement plan into an IRA. It is reportable, but not taxable. The annuitant can avoid having taxes taken out of the eligible distribution by choosing the direct rollover option.

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Estimated Deposit Date
The last date that the insurance company expects to receive the lump sum deposit to be invested in an annuity. Quotes through Income Solutions® are based off of this estimated deposit date.

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Fixed Period Annuity
Single
Beginning on the commencement date (the date of the first payment) the Annuitant will receive a monthly payment for the fixed period selected upon purchase (5, 10, 15 or 20 years). The Annuitant is not guaranteed by the insurance company a lifetime income. Income is only guaranteed by the insurance company for the fixed period selected at the time of purchase. If the Annuitant dies before the end of the fixed period, the designated beneficiary receives the remaining monthly payments.
Joint and survivor
Joint and Survivor is not available with fixed period only annuity.

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Income Replacement Ratio
The percentage of income that an individual needs to maintain the same standard of living during each year of retirement. This ratio is generally less than 100 percent, because some of an individual’s expenses (i.e., taxes, commuting costs, savings needs) decrease after retirement. The desired replacement ratio will vary by individual needs and circumstances.

Inflation Adjusted Annuity
An annuity option that provides an annual inflation adjustment to the monthly income amount based on changes in the Consumer Price Index (CPI-U) published by the Bureau of Labor Statistics. This option does not guarantee an annual increase to your monthly income amount as changes in the CPI-U may at times be negative and the adjustment terms for this option may vary by insurance company. The cost of this option is reflected in the quotes provided by insurance companies.

Institutional Annuity Pricing
Institutional pricing gives individuals the same type of buying power that large organizations have. The Income Solutions® program was designed to take advantage of this cost effective pricing method to provide generally more favorable pricing possible and pass that on to each individual purchasing an annuity.

IRA Rollover
An option that allows you to transfer your money from a qualified retirement plan directly to an IRA. You never come into direct contact with the money and it is reportable, but not taxable. The annuitant can avoid having taxes taken out of the eligible distribution by choosing the direct rollover option.

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Joint Annuitant
The person named by the primary annuitant (person purchasing the annuity) at the time of purchase to receive payments following the death of the primary annuitant in a joint and survivor annuity. In most cases, the payment to the joint annuitant is a specified fraction of the original payment amount, which is selected upon purchase of the annuity. A joint annuitant may be a spouse or non-spouse. The joint annuitant can not change after a purchase of the annuity, as the quote is based on this person's gender and age.

Joint and Survivor Annuity
An annuity issued on two individuals under which monthly payments continue in whole (100%) or in part (at 50%, 66.67% or 75%, selected at the time of purchase) until both individuals die or for the remainder of the annuity. Survivor benefits will be based off of the death of the primary annuitant.

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Life Annuity with a Cash Refund Option
Single
Beginning on the commencement date (the date of the first payment) the Annuitant will receive a monthly payment for his or her lifetime. If the Annuitant dies before the total sum paid equals or exceeds the original purchase amount of the annuity, the remainder amount will be paid in a lump sum death benefit to the designated beneficiary.
Joint and Survivor
Beginning on the commencement date (the date of the first payment) the Annuitant and Joint Annuitant will receive a monthly payment for life. If the Annuitant dies first, the Joint Annuitant will continue to receive a specified percentage (50%, 66 2/3%, 75% or 100%) of the Annuitant’s monthly payment for the remainder of his or her lifetime. If the Joint Annuitant dies first, the Annuitant continues to receive their designated monthly payment, unchanged, for the remainder of his or her lifetime. If both the Annuitant and Joint Annuitant die before the total sum paid to them equals or exceeds the original purchase amount of the annuity, the remainder amount will be paid in a lump sum death benefit to the designated beneficiary.

Life Annuity with Fixed Period
Single
Beginning on the commencement date (the date of the first payment) the Annuitant will receive a monthly payment for his or her lifetime. If the Annuitant dies before the end of the fixed period they selected upon purchase, (5, 10, 15 or 20 years), their designated beneficiary will continue to receive monthly payments until the end of that fixed period. If the Annuitant dies after the end of the fixed period, there is no death benefit.
Joint and Survivor
Beginning on the commencement date (the date of the first payment) the Annuitant and Joint Annuitant will receive a monthly payment for life. If the Annuitant dies before the fixed period they selected upon purchase (5, 10, 15 or 20 years), the Joint Annuitant will continue to receive full monthly payments until the end of that fixed period. At the end of the fixed period selected, the Joint Annuitant will continue to receive the specified percentage selected upon purchase (50%, 66 2/3%, 75% or 100%) of the Annuitant’s monthly payment for the remainder of his or her lifetime. If the Joint Annuitant dies first, the Annuitant continues to receive their designated monthly payment, unchanged, for the remainder of his or her lifetime. If both the Annuitant and Joint Annuitant die before the end of the fixed period, the designated beneficiary receives full monthly payments for the remainder of that fixed period.

Life Only Annuity with No Refund
Single
Beginning on the commencement date (the date of the first payment) a monthly payment will be made to the Annuitant for his or her lifetime. Upon the Annuitant’s death all payments cease. There is no death benefit.
Joint and Survivor
Beginning on the commencement date (the date of the first payment) the Annuitant and Joint Annuitant will receive a monthly payment for life. If the Annuitant dies first, the Joint Annuitant will continue to receive a specified percentage (50%, 66 2/3%, 75% or 100%) of the Annuitant’s monthly payment for the remainder of his or her lifetime. If the Joint Annuitant dies first, the Annuitant continues to receive their designated monthly payment, unchanged, for the remainder of his or her lifetime. There is no death benefit after both the Annuitant and Joint Annuitant die.

Lump Sum Deposit
A single payment made to the insurance company for the purchase of an annuity.

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Moody's Investors Service
Moody’s is a Nationally Recognized Statistical Rating Organization (NRSRO) that evaluates the financial quality of institutions’ debt, the claims-paying ability of life insurers, and the deposit credit rating of banks.

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Principal
The amount of money you put into an investment.

Primary Annuitant
The primary annuitant is the person purchasing the annuity and is the owner.

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Rating Agency
A firm that evaluates the financial quality of institutions’ debt, the claims-paying ability of life insurers, and the deposit credit rating of banks. Examples of Nationally Recognized Statistical Rating Organizations (NRSRO) include A.M. Best, Moody’s Investors Service, and Standard & Poor’s (S&P) Ratings Group.

Retail Annuity Pricing
Pricing offered to individuals purchasing an annuity from an insurance company or agent that does not take into account group discount rates and which can include additional distribution, administrative and sales charges.

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Standard & Poor's Ratings Group
S&P is a Nationally Recognized Statistical Rating Organization (NRSRO) that evaluates the financial quality of institutions’ debt, the claims-paying ability of life insurers, and the deposit credit rating of banks.

State of Residence
The state in which you reside the majority of the time.

Survivor Benefit Percent
Percent of monthly income to be received by joint annuitant after the annuitant's death.

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Transitioning Investor
Individuals who have reached the end of, or will soon be reaching the end of, their peak earning years. They are transitioning from earning income to replacing or supplementing their income.

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Variable Annuity
Variable annuities do not offer a set rate of return. The performance of a variable annuity is determined by the performance of the underlying stocks, bonds, money markets and other fixed-rate instruments in which your money is invested. Income Solutions® does not offer variable annuity products.

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