Glossary

Exclusion ratio is a tax computation applied to income payments from a non-qualified annuity that determines the portion of each payment treated as a nontaxable return of the contract owner's after-tax investment, with the remaining portion taxed as ordinary income.

Fee-based is a compensation model in which a financial professional is paid through ongoing fees — typically a percentage of assets under management or a flat retainer — rather than through commissions on individual placements, distinguished from fee-only by the possibility of accepting commissions.

A fixed account is the component of an annuity contract that credits a declared interest rate, supported by the assets of the insurer's general account, available within indexed annuities and variable annuities as one of the available crediting choices alongside index-linked or subaccount options.

A fixed annuity is an insurance contract under which the insurer guarantees the principal and a specified or formula-determined interest crediting rate, with values not subject to direct market fluctuation, structured either as an accumulation arrangement or as an income arrangement.

A fixed indexed annuity (FIA) is a deferred fixed annuity in which the crediting rate is determined by a formula tied to the performance of a specified market index, subject to caps, participation rates, and spreads set by the insurer, with principal protected from direct market loss.