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GLOSSARY OF INSURANCE AND ANNUITIES TERMS

Accumulation PeriodThe period during which you pay premiums on a deferred annuity.

Accumulated ValueThe actual amount of money in your annuity account when the payout period starts.

Administrative FeesAn amount deducted from the life insurance policy or annuity to pay the costs of marketing or administering the life insurance policy or annuity.

AmendmentAn attachment to a life insurance policy that modifies certain policy benefits.

Agent CommissionThe money paid to an insurance agent for selling an insurance policy or annuity. A commission is almost always calculated as a percentage of the premium.

Annuitization PeriodThe period of time in which you receive payments from the annuity.

Annuity A contract in which a buyer deposits money with a life insurance company for investment. The contract provides for payments to be made at regular intervals for a fixed time period or for life. Assignment The transfer to another person of all or part of a policy owner's legal title and rights to a policy. These may be irrevocable (can never be changed) or collateral (some rights are transferred, or for a certain period of time.)

BeneficiaryThe person or entity designated to receive the death benefits from a life insurance policy or annuity contract when the insured person dies.

Benefit RateInsurance companies usually express the rates for annuity payout plans in terms of a monthly income per $1,000 applied. The company multiplies the value of the accumulation fund by this rate to determine the monthly payments which you will receive during the payout period.

Cash Surrender ValueThe amount of cash that is due the policy owner who surrenders a life insurance policy. Surrendering the entire value, with termination of all insurance benefits, is often called "cashing out".

ChurningA fraudulent practice in which insurance agents mislead consumers into giving up the cash value, or taking loans against current life policies to buy new policies with a new company or with the same company. Since agents receive a commission when a new policy is purchased, the agent "churns" policies to make more money for himself or herself.

Death Benefit Amount paid to the beneficiary upon the death of the insured.

Deferred AnnuityAn annuity, the income benefits from which begin at some designated future date (as contrasted to an annuity the benefits from which begin at once, called an Immediate Annuity).

DividendMoney paid annually to a policyholder as a partial return on the paid premium.

Many times a policyholder can use dividends to increase the cash value or death benefits.
Evidence of InsurabilityA signed health questionnaire or a physical examination, depending on a company's requirement.

Face ValueThe initial amount of death benefit provided by the policy as shown on the front page of the contract. The actual death benefit may be higher or lower depending on the options selected, outstanding policy loans or premium owed.

Flexible Premium Annuity ContractAn annuity that permits varying premium payments from year to year, and which is often used for IRAs.

Free-Look PeriodThe time period after a life insurance policy or an annuity is delivered during which the policy owner may review it and return it to the company for a full refund of the initial premium.

Grace PeriodThe time, usually 30 days, during which a policy remains in force after the premium is due but not paid. The policy lapses as of the day the premium was originally due unless the premium is paid before the end of the 30 days or the insured dies during the grace period.

Guaranteed Insurability RiderA rider attached to a life insurance policy which permits you to buy additional insurance at one or more specified "option dates" without providing new evidence of insurability at that time.

Guaranteed Minimum Interest RateThe lowest interest rate a company will credit to a fixed annuity accumulation fund.

Immediate AnnuityAnnuity payments that begin immediately or within about a year after the time you purchase the annuity.

IncontestabilityA provision that places a two-year time limit on a company's right to deny payment of a claim because of a material misrepresentation on your application.

Initial Interest RateThe interest rate that the insurance company credits to your premium when first issuing the policy. The company may guarantee this rate for one or more years. Otherwise, the rate is not guaranteed, and may change at the discretion of the company.

LapseTermination of a policy because of failure to pay the premium.

LoadAny sales fees or charges you pay in purchasing a policy or annuity.

Material MisrepresentationA significant misstatement in an application form. If a company had access to the correct information at the time of application, the company might not have agreed to accept the application.

Paid-Up AdditionsAdditional life insurance purchased with policy dividends. No additional premium payments are needed for paid-up additions.

Payout PeriodThe period during which you receive the income from your annuity. Also known as the annuitization phase.

Policy OwnerThe person who owns an individual life insurance policy or annuity. This person may be the insured, the annuitant, the beneficiary or another person. The policy owner usually is the one who pays the premium and is the only person who may make changes to a policy.

Rated PolicyA policy issued at a higher premium to cover a person classified as a greater-than-average risk, usually due to impaired health or a dangerous occupation.

ReplacementA replacement happens when a consumer uses some or all of the value of life insurance or an annuity that the consumer currently owns to buy a new life insurance policy or annuity contract.

RiderA written amendment attached to an insurance policy expanding or limiting the benefits otherwise payable under an insurance policy.

Scheduled Premium Annuity ContractAn annuity that defines, in the contract, the size and frequency of premiums you must pay.

Surrender ChargesCharges that are deducted if your life insurance policy or annuity is cashed in (surrendered). The amount of the surrender charges vary widely among insurance companies and may change over the life of the policy.

Tax-Qualified AnnuityAn annuity that allows you to deduct your premium payments from your taxable income when filing your tax return with the IRS.

UnderwriterThe person who reviews an application for insurance and decides if the applicant is acceptable and at what premium rate.

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How much is my annuity insured for if my insurance company goes out of business?


State Guaranty Associations:for informational use only. This information is not intended as legal advice, and no liability is assumed in connection with its use. Users should seek advice from a qualified attorney and should not rely on this compilation when considering any questions relating to guaranty association coverage.

Alabama Life & Disability Insurance Guaranty Association
www.allifega.org
Alaska Life & Health Insurance Guaranty Association
www.aklifega.org
Arizona Life & Disability Insurance Guaranty Fund
http://www.state.az.us/id/
Arkansas Life and Health Insurance Guaranty Association
www.arlifega.org
Asociación de Garantia de Seguros de Vida e Incapacidad de Puerto Rico
http://www.ocs.gobierno.pr/
California Life & Health Insurance Guarantee Association
hwww.califega.org
Colorado Life & Health Insurance Protection Association
www.lhipa.org
Connecticut Life and Health Insurance Guaranty Association
www.ctlifega.org
Delaware Life & Health Insurance Guaranty Association
www.delifega.org
District of Columbia Life & Health Insurance Guaranty Association
www.dclifega.org
Florida Life & Health Insurance Guaranty Association
www.flahiga.org
Georgia Life & Health Insurance Guaranty Association
www.gaiga.org
Hawaii Life & Disability Insurance Guaranty Association
www.hilifega.org
Idaho Life & Health Insurance Guaranty Association
www.idlifega.org
Illinois Life & Health Insurance Guaranty Association
www.ilhiga.org
Indiana Life and Health Insurance Guaranty Association
www.inlifega.org
Iowa Life & Health Insurance Guaranty Association
www.ialifega.org
Kansas Life & Health Insurance Guaranty Association
www.kslifega.org
Kentucky Life & Health Insurance Guaranty Association
www.klhiga.org
Life Insurance Company Guaranty Corporation of New York
www.nylifega.org
Louisiana Life & Health Insurance Guaranty Association
www.lalifega.org
Maine Life & Health Insurance Guaranty Association
www.melifega.org
Maryland Life & Health Insurance Guaranty Corporation
www.mdlifega.org
Massachusetts Life & Health Insurance Guaranty Association
www.malifega.org
Michigan Life & Health Insurance Guaranty Association
www.milifega.org

Minnesota Life & Health Insurance Guaranty Association
www.mnlifega.org
Mississippi Life & Health Insurance Guaranty Association
www.mslifega.org
Missouri Life & Health Insurance Guaranty Association
www.mo-iga.org
Montana Life & Health Insurance Guaranty Association
www.mtlifega.org
Nebraska Life & Health Insurance Guaranty Association
www.nelifega.org
Nevada Life & Health Insurance Guaranty Association
www.nvlifega.org
New Hampshire Life & Health Insurance Guaranty Association
www.nhlifega.org
New Jersey Life & Health Insurance Guaranty Association
www.njlifega.org
New Mexico Life Insurance Guaranty Association
www.nmlifega.org
North Carolina Life & Health Insurance Guaranty Association
www.nclifega.org
North Dakota Life & Health Insurance Guaranty Association
www.ndlifega.org
Ohio Life & Health Insurance Guaranty Association
www.olhiga.org
Oklahoma Life & Health Insurance Guaranty Association
www.oklifega.org
Oregon Life & Health Insurance Guaranty Association
www.orlifega.org
Pennsylvania Life & Health Insurance Guaranty Association
www.palifega.org
Rhode Island Life & Health Insurance Guaranty Association
www.rilifega.org
South Carolina Life, Accident & Health Insurance Guaranty Association
www.sclifega.org
South Dakota Life & Health Insurance Guaranty Association
www.sdlifega.org
Tennessee Life & Health Insurance Guaranty Association
www.tnlifega.org
Texas Life, Accident, Health & Hospital Service Insurance Guaranty Association
www.txlifega.org
Utah Life & Health Insurance Guaranty Association
www.utlifega.org
Vermont Life & Health Insurance Guaranty Association
www.vtlifega.org
Virginia Life, Accident, & Sickness Insurance Guaranty Association
www.valifega.org
Washington Life & Disability Insurance Guaranty Association
www.walifega.org
West Virginia Life & Health Insurance Guaranty Association
www.wvlifega.org
Wisconsin Insurance Security Fund
www.wilifega.org

Wyoming Life & health insurance Guaranty Associationwww.wlhiga.org

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Help With My Annuity
By: Sherman Hu

With my annuities." Nothing has changed...just a lonely senior who can't trust anybody with her annuity because every time she asks for advice, someone tries to make her invest in a different annuity...Sound familiar? Well you are not alone.Often times when speaking to a senior about their annuities, I ask them their biggest complaint. Time and time again they say that it is hard to find someone who can help them with their annuity without trying to sell them another one. It is not uncommon. The truth of the matter is, many annuity agents are not out to help the client, but to help themselves (I am sure you are not surprised). They want to make the "fast buck" without regards for the client's needs or investment objectives. The unfortunate part is that, this isn't going to change.Honest help with an annuity is hard to find. Insurance agents don't get paid for their time, they usually only get paid for making a sale. So it's no wonder why they always recommend another annuity. I once visited someone who needed help with an annuity that an agent "talked him into." The problem was, in order to get into this annuity, the agent talked him into surrendering his old annuity and paying a $13,000 surrender charge to do so-AND THE ANNUITY HE PUT HIM INTO WAS WORSE THAN THE ANNUITY HE GOT HIM OUT OF...When I asked him why he called the other salesperson in the first place, he told me he just needed to make a small withdrawal from his annuity and didn't know how...And the agent tricked him into switching it into another annuity and paying a huge surrender charge which he could never recover due to his age...Fortunately it wasn't too late and we were able to reverse his transaction.However, good help is hard to find. There is no doubt. This may come as no surprise but my recommendation to anyone who needs help is to first purchase the book "Annuities: The Shocking Truths Revealed." Sure, I wrote it and sure I have a vested interest in saying that, but at least it talks about annuities in a way that anyone can understand them. And at least it points out all the things people who own annuities or are looking for annuities need to be careful of. Most importantly, it points out the dirty little secrets that agents never tell you about annuities.The bottom line is this. If you need help with your annuity, you need to be vigilant. Many agents are out there for their own good and you must be aware of this. Utilize your resources and learn the right questions to ask your agent before making a decision (Also found in the book). Sure, you may just give up and never get help but the worst decision is no decision. Help with your annuity is hard to find, but not impossible...that's why I wrote the book!!! Good luck and remember... Ignorance is not bliss...
About the Author:Sherman Hu

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8 Yr.
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Safe Investing with an Equity-Indexed Annuity.

These days it seems investors are looking for safety and security more than ever, especially after the major stock market correction witnessed from 1999-2002. Four years later, numerous brokerage and variable annuity accounts still have not recovered their losses from that time period.
These days it seems investors are looking for safety and security more than ever, especially after the major stock market correction witnessed from 1999-2002. Four years later, numerous brokerage and variable annuity accounts still have not recovered their losses from that time period. Unfortunately, many investors were counting on those funds to provide income during their retirements.
Thus the introduction of the equity indexed annuity, or EIA, to the main stream marketplace. Designed to provide a greater return than the traditional fixed annuity, the equity indexed annuity can be a reliable alternative to a brokerage account. Only fifteen years old, several billion dollars have been deposited into these accounts.
First, a potential investor should have a little background information. Generally, an annuity functions in the following manner: The investor, usually called an owner or annuitant, agrees to deposit funds with an insurance company for a specified period of time, say 7 years. The annuity is said to be in deferral during that period of time. While in deferral, most annuities will allow for partial distributions of interest gains or a yearly 10% free withdrawal or the required minimum distribution mandated by the I.R.S. (Many annuities allow for larger distributions if the owner is confined to a nursing home or is terminally ill.) Still another way to distribute annuity dollars is through a systematic withdrawal, referred to as an annuitization, based on a pre-determined schedule, say 5 years. However, if the consumer decides to take the entire contract out as a lump sum before the annuity has matured, then penalties are invoked based on the surrender schedule in the annuity contract. If the investor passes away, the lump sum of the annuity is paid to a beneficiary at passing unless other arrangements have been made.
Technically, equity indexed annuities are characterized as fixed annuities by the various Departments of Insurance in each state. That is to say, at no point does the investor ever own any variable type of security like a stock, bond or mutual fund within the EIA account. These accounts do not fluctuate in value like a variable annuity might. Yet the equity indexed annuity is not like your typical fixed annuity either.
What makes EIAs different than a traditional fixed annuity is how interest is credited to the account. Typically, the insurance company will buy an option in a particular index like the DOW, S&P 500 or the NASDAQ. After a period of time, usually one year, the option contract comes due. One of two things will then occur. If the market index has advanced, the option is cashed in and interest is credited to the annuity principal. Conversely, if the market has retreated, the option expires and no interest is credited to the account for that year.
In practice, the annuity either gains or maintains value each year, but the investment cannot lose value due to negative market fluctuation. (It is also important to note that all EIAs have a minimum guarantee associated with their returns. For example, this guarantee might state that if the market declines every year over the life of the annuity, the insurance company will guarantee payment of 2% on 88% of the premium deposited. However, it is practically unheard of for this safety feature to be utilized.) Investors should also know that most equity-indexed annuities have a fixed interest account as an additional investment option. When interest rates are high and the stock market is in decline, the fixed account might be used to credit interest to the annuity principal.
How do these annuities perform? Historically many of these accounts have averaged returns of 7% or better. In years when the broader markets have performed well so have EIAs. It is not uncommon for investors to enjoy interest payments during these prosperous years of 10-20% or better. But the crucial value of these accounts is realized during rapid market declines, when the equity indexed annuity will maintain its principal as well as interest gains from past years.
These facts may explain the recent popularity of EIAs, especially among retirees looking to preserve a lifetime's worth of hard work. With the market advancing and declining so rapidly, many consumers are looking for safety and security without having to sacrifice reasonable interest returns. Granted, these annuities will not return 50% in one year, like a fortunate stock or fund pick might, but the peace of mind investors gain knowing their investment cannot decline has many placing a portion of their retirement funds into these accounts.
To learn more about equity-indexed annuities and other insurance products visit: http://www.ohioinsureplan.com

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7 Yr.
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Annuity 101
By Robert Thatcher

If a person has a lot of money and decides not to spend it, there are ways of making this grow. One option is keeping it in the bank and letting it grow interest. The other is investing it in the stock market with the help of a financial consultant. This professional will be able to know what stock is worth buying and when is the best time to sell. Another way of making the money grow especially if the person does not have medical insurance will be in the form of an annuity. An annuity is a deal made between the insurance firm and the person. This arrangement allows the insurance company to invest the money of an individual in various business ventures with a percentage of growth to be returned in a number of years. This money can also earn interest on its own which will be given back over a period of time. The disadvantages of this deal may make the person wait longer than expected to be able to get the money back due to surrender periods. Rules set by the IRS may reduce how much the person can get back due to taxes. In the event of the untimely death of the individual, the beneficiaries will also not be able to get the entire payment because of tax deductions. It is advisable for the person to pick a strong and stable insurance company. If this money was invested in a firm that suddenly goes bankrupt, the individual will not be able to get anything. To be sure that the insurance company is in good standing with the industry, one should only go for a firm that has been given a good rating from agencies such as Standard & Poors, Moodys Investor Services, Duff & Phelps or AM Best. Should the person still want to person an annuity, there are some things that have to be decided upon to make it work. The name of the person, the insurance company and who are the beneficiaries in the event something happens. Since a selling agent will probably be the one who will approach the individual and present this proposition, the individual should consult and be accompanied by the family attorney and a financial consultant to make sure the deal is perfectly safe. The person should be aware of the pros and cons of an annuity. When this is done, the individual should carefully read the contents of the document before signing it. The person should then be ready to make the first deposit in the form of a check addressed to the insurance company. At the same time, this document should be stored in a safe place together with other papers that the person may need to bring out in the future. Changes in the document may happen at any time which makes it important to have this document stored in a safe place. An annuity is something that people who are either rich or poor can invest on. Since this works like an insurance plan, the individual may choose to give the payment in one lump sum or do it on a monthly basis. Since it is probably not wise to invest the money in one place, one should keep some money elsewhere that is easily accessible in case of emergencies.About The Author:Robert Thatcher is a freelance publisher based in Cupertino, California. He publishes articles and reports in various publications and provides annuity resources on http://www.allaboutannuities.info

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Highest CD rates:


North American Company
North American Builder
10 Yr.
4.83%
Midland National Life
MNL Guarantee Plus 9
9 Yr.
4.90%
North American Company
North American Guarantee 8
8 Yr.
4.65%
Midland National Life
MNL Guarantee Plus 7
7 Yr.
4.85%
Beneficial Financial
Guaranteed Advantage 6
6 Yr.
5.04%
Beneficial Financial
Guaranteed Step-Up 5
5 Yr.
4.90%
Midland National Life
Direct Guarantee 4
4 Yr.
4.50%
Midland National Life
Direct Guarantee 3
3 Yr.
4.33%
Annuity Investors Life Insurance Company
AssetSelect 2
2 Yr.
4.10%
Beneficial Financial
Advantage 1
1 Yr.
5.02%