Have you just begun the research process surrounding financial planning, retirement, understanding annuity options, or other areas of wealth management? We are aware that not everyone is at the same stage of the game. In order to break through the confusion often encountered when dealing with financial planning, we are highlighting common terms you need to know when dealing with a lump sum annuity, fixed annuities, and other financial terms.
Lump Sum Annuity Common Terms and Definitions: A
Accumulation Phase: Understanding the accumulation phase, or the period of time when an annuity owner can add tax-deferred money to the plan, is key when preparing for your retirement. During the accumulation phase, you should have set goals in order to keep on track of exactly how much you’ll need to contribute annually in order to meet your financial goals.
Accumulation Unit Value: During the accumulation phase (defined above), your accumulation unit value is the net asset value after subaccount management fees have been subtracted and all income and capital gains have been included. Your insurance company should provide accumulation unit value (or AUV) tracking along with performance summary sheets.
Annuitant: When you see the word annuitant in your contract, the term is referring to the annuity owner (you). The annuitant’s life expectancy is the figure used to calculate the payment amounts.
Annuity: In simplest terms, an annuity is a contract provided by a life insurance company to offer investment income which is tax-deferred until time of withdrawal. It is essentially, the agreement by which the plan participant receives predetermined payment amounts. Depending on the type of contract, or type of annuity, the payment period can be for a lifetime or a number of years.
Annuitize: When an individual trades the value of an annuity in return for a certain agreed upon payment amount for a specified time period, this is called annuitization.
Anticipated Initial Investment: The amount you are planning to invest in your annuity at the beginning of the annuity contract is described as your anticipated initial investment. Many insurance companies have minimum initial investment amounts for the annuities they offer.
Asset Protection Trust: An APT is gives an individual, who is called the trustor, fiduciary control of property to a trustee (or institution). This is generally connected to beneficiaries and is used with investments and annuities when planning how investments will be distributed to them.
Assets: Your assets include all of the finances placed under the management of a particular company. These can include real estate, annuities, investments, stocks, bonds, and cash.
Asset Manager: The person placed in charge of decisions regarding assets, such as annuities, stocks, bonds, real estate, and other investments.
Do You Have a Thorough Understanding of Investment and Lump Sum Annuity Terminology?
These are common annuity related terms and definitions to assist you as you explore investments, annuities, and other wealth building, protection, and management tools. Reading over your contracts and understanding the terminology is the first step to responsible and prudent financial strategies.
If the financial term you are looking for isn’t here, keep checking back. Our list of annuity and financial definitions will continue to grow.