Defined terms for the annuity market and lifetime income landscape.
A 1035 exchange is a tax-free swap of one annuity or life insurance contract for another eligible contract under IRC Section 1035, allowing the contract owner to move from one product to another without triggering current income tax on any accumulated earnings.
The account value is the contractually defined current value of a deferred annuity, used as the reference for surrender, withdrawal, and benefit calculations; in many product types it is equivalent to the accumulation value, while in some contract structures the two refer to distinct amounts.
The accumulation phase is the period of a deferred annuity contract during which premium is held and credited under the contract's rules, prior to annuitization or the commencement of income payments, with the contract's accumulation value evolving under the crediting and charge mechanisms.
The accumulation value is the contractually defined value of a deferred annuity during the accumulation phase, calculated under the contract's rules — credited interest, index-linked credits, premium additions, withdrawals, and contract charges — and used to compute surrender and withdrawal amounts.
An advanced life deferred annuity (ALDA) is a deferred income annuity structured as longevity insurance, characterized by an extended deferral period — typically fifteen years or more — and payments commencing at an advanced age such as 80 or 85, with a materially higher payment-per-dollar.
