The period during which your annuity contract is growing — before you begin taking income or withdrawals.

A financial strength rating assigned to insurance companies. Ranges from A++ (Superior) to D. We only recommend A- or better.

Converting your annuity's accumulated value into a stream of regular income payments. Once annuitized, the lump sum belongs to the insurer.

The person designated to receive your annuity's death benefit upon your death, bypassing probate.

In an FIA, the maximum interest credited in a given crediting period. If the S&P 500 rises 20% and your cap is 8%, you receive 8%.

The original after-tax amount you contributed to a non-qualified annuity. Cost basis is returned to you tax-free on withdrawal.

The amount paid to your beneficiary upon your death. Typically the full account value including accumulated interest, bypassing probate.

An annuity purchased today that begins paying guaranteed income at a specified future date. A QLAC is a DIA variant for use inside IRAs.

For non-qualified SPIAs, the IRS-calculated percentage of each payment that represents tax-free return of your original premium.

An annuity whose interest is linked to a market index subject to a cap, with a guaranteed floor of zero. Principal cannot decrease due to market performance.

A mandatory period (10–30 days, varies by state) after receiving your contract during which you can cancel for a full refund.

The annual amount you can withdraw without surrender charges — typically 10% of account value per year.

Guaranteed Lifetime Withdrawal Benefit. An optional income rider on FIAs that guarantees minimum annual withdrawals for life regardless of account value.

An optional add-on to an FIA that provides a guaranteed income stream in the future. Creates two account values: actual contract value and income account value.

Last In, First Out — the IRS rule for non-qualified deferred annuities. First dollars withdrawn are treated as taxable earnings; principal comes out last.

The pooling benefit that allows SPIAs to pay more income than a bond portfolio. People who die earlier subsidize the income of those who live longer.

Multi-Year Guaranteed Annuity. Locks in a guaranteed interest rate for a specified term (2–10 years) with tax-deferred growth. Similar to a CD with consistently higher rates.

In an FIA, the percentage of the index gain credited to your account. An 80% participation rate on a 10% return credits you 8%.

Qualified Longevity Annuity Contract. A DIA funded with pre-tax IRA/401k funds. Up to $200,000 is excluded from RMD calculations until income begins (no later than age 85).

Required Minimum Distribution. The minimum annual amount the IRS requires you to withdraw from traditional IRAs and 401ks starting at age 73.

Single Premium Immediate Annuity. A lump sum purchase that begins paying guaranteed income within 30 days, continuing for life. The closest thing to a private pension.

A declining fee on withdrawals above the free withdrawal amount during the surrender period. Typically 7–9% in year one, declining to zero at term end.

The ability to postpone paying taxes on earnings until you withdraw them. Annuity interest accumulates tax-deferred, unlike CD interest which is taxed annually.

An IRS-approved tax-free transfer from one annuity contract to another. Cost basis carries over. Transfer must be direct carrier-to-carrier. Does not waive surrender charges.