Helpful Annuity Terms
Purchasing an annuity is an important investment and as such you should have a good command of the terms that will be thrown about by your insurance agent, financial advisor or annuity broker. It’s easy for the professionals to speak in abbreviations and jargon but for someone buying their first annuity it can be quite confusing.
Buying an annuity is essentially entering into a contract. When you buy a house there is a great deal of scrutiny by lawyers and the purchaser over the documents that need to be signed. Keep that same attitude when buying an annuity product; know what everyone is talking about.
Here are a few terms you should definitely understand.
- This is the individual that is going to own the annuity. The reason that exact person needs to be identified is that many annuities are calculated from the age of the buyer.
- This action is when you make the annuity a permanent contract, giving your investment principal to the annuity company, in return for regular payments for a set amount of time or the rest of your life.
- Many annuities will have a designated person that the payments will go to upon the death of the original purchaser. This is much like a life insurance policy, with a named beneficiary.
- Interest Rate
- When you give a lump sum of money to an annuity company you will get regular payments from that. The amount of those payments will be based upon the interest rate that the company will give you on your money.
Further Areas of Interest
If you come across confusing annuity terms visit the Insurance Information Institute.