Annuitites Expert Witness Terminology

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When hiring an annuities expert witness, it may be a good idea to study the appropriate terminology. The Annuities Institute offers an extensive list of annuity terms including:

Annuity An annuity is a contract issued by a life insurance company that provides for tax deferral of investment income until withdrawn from the contract. An annuity can also be referred to as a contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years.

Deferred Annuities (Tax Deferred)
Deferred annuities are annuity contracts for people who want to save on a tax-deferred basis for many years, and then convert to a payout schedule once they retire. Contrary to an immediate annuity, taxes on deferred annuities do not become payable until some years after its purchase. The single premium or regular premiums are capitalized during the deferred period, then the built up capital is converted into an annuity. Deferred annuities typically stipulate that payments be made to the Annuitant at a later date, such as when the annuitant reaches a certain age.

Equity Indexed Annuity An annuity whose returns are based upon the performance of an equity market index, such as the S&P 500, DJIA, or NASDAQ. The principal investment is protected from losses in the equity market, while gains add to the annuity’s returns.

Fixed Annuity (fixed rate annuity)
Fixed annuities are an investment vehicle offered by insurance companies that guarantee a stream of fixed payments over the life of the annuity. The insurer, not the insured, takes the investment risk. Fixed annuities are sometimes called a fixed dollar annuity.

Fixed Deferred Annuity With fixed annuities, an insurance company offers a guaranteed interest rate plus safety of your principal and earnings. Your interest rate will be reset periodically, based on economic and other factors, but is guaranteed to never fall below a certain rate
Flexible Premium Annuity A flexible premium annuity has a regular periodic payment that varies.

Immediate Annuity An immediate annuity is an annuity which is purchased with a single payment and which begins to pay out right away.