Annuities come with a lot of jargon. This searchable A–Z glossary explains every term in plain English — so nothing you read about annuities feels like a foreign language.
Every annuity term you'll encounter, explained in plain English. Use the search box or jump to a letter. If a term you're looking for isn't here, just ask Radar AI.
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The period when your annuity is growing — before you start taking income or withdrawals. Your money earns interest during this time.
The person whose life the annuity is based on, and whose age and life expectancy determine income payments.
Converting your annuity's value into a stream of regular income payments, often for life or for a set number of years.
A letter grade from an independent agency that measures an insurance company's financial strength and ability to pay its claims.
The person (or people) you name to receive the annuity's value when you pass away. Annuities typically pass to beneficiaries without going through probate.
A separate value used to calculate income from a lifetime-income rider. It's not the same as your actual account value and usually can't be withdrawn as a lump sum.
On a fixed indexed annuity, the maximum interest you can be credited in a period. If the index rises above the cap, you receive the cap — not the full gain.
The insurance company that issues and stands behind your annuity contract.
The amount your beneficiary receives when you pass away — often the remaining account value.
An annuity that grows for a period before you begin taking income — as opposed to an immediate annuity that starts paying right away.
An annuity you buy now to start guaranteed income at a chosen future date — useful for locking in future retirement income.
The formula that determines how much of each annuitized payment is tax-free (return of your deposit) versus taxable (growth).
An annuity whose growth is linked to a market index with a floor of zero — you don't lose principal to market drops, and you share in gains up to a limit.
An independent grade of an insurer's ability to meet its obligations. Higher ratings signal greater financial strength.
An annuity that guarantees your principal and a set rate or income. Includes MYGAs and FIAs. Not tied to market losses.
A window after purchase (commonly 10–30 days) during which you can cancel the annuity for a full refund, for any reason.
The amount you can take out each year without a surrender charge — often around 10% of your account value.
An optional rider that guarantees you can withdraw income for life while keeping access to your account value. Charges an annual fee.
A state-level safety net that protects policyholders if an insurer becomes insolvent. Coverage limits vary by state.
An annuity that begins paying income almost right away, usually within a year of purchase.
An optional add-on that guarantees lifetime income from your annuity. Adds flexibility and a guarantee, for an annual fee.
The method an FIA uses to calculate your interest based on a market index, using a cap, participation rate, or spread.
How easily you can access your money. Annuities have limited liquidity during the surrender period, with free-withdrawal provisions.
An adjustment to your surrender value — up or down — based on how interest rates have moved, applied only if you withdraw more than your free amount during the term.
The simplest fixed annuity: a lump sum that earns a guaranteed rate for a set term. The closest cousin to a bank CD.
Money funded with dollars you've already paid taxes on. In a non-qualified annuity, only the growth is taxed at withdrawal.
On an FIA, the percentage of an index's gain you receive. A 50% participation rate credits you half of the index's increase.
The money you put into an annuity — your deposit.
Your original deposit, separate from any interest it earns. Fixed annuities protect your principal from market loss.
Money funded with pre-tax dollars, like a Traditional IRA or 401(k). In a qualified annuity, the entire withdrawal is generally taxable.
A feature guaranteeing you can get back at least your original deposit if you need to exit early.
An optional add-on to an annuity contract that provides an extra benefit — like lifetime income or an enhanced death benefit — usually for a fee.
On an FIA, a percentage subtracted from the index's gain before crediting. If the index rises 8% and the spread is 2%, you're credited 6%.
An annuity bought with a lump sum that begins paying guaranteed income almost immediately.
A fee for withdrawing more than your allowed amount before the contract's term ends. It declines each year and disappears at term's end.
The initial term of the contract during which surrender charges apply — commonly 3 to 10 years.
Growth you don't pay taxes on until you withdraw it — a core advantage of annuities that lets your money compound more efficiently.
The length of an annuity's guarantee or surrender period — for example, a 5-year MYGA.
A tax-free transfer from one annuity to another, allowed under Section 1035 of the tax code. Must be a direct transfer between insurers.
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