Defined terms for the annuity market and lifetime income landscape.
A longevity annuity is any deferred income annuity designed primarily as longevity insurance — typically with a deferral period of fifteen years or more and payments commencing at an advanced age — with the DIA and the advanced life deferred annuity (ALDA) as the two principal structural sub-types.
A market value adjustment is a contractual adjustment applied to a withdrawal or surrender from a deferred annuity, calculated by reference to changes in interest rates or a specified index between contract issue and the time of withdrawal, increasing or decreasing the payable amount.
Monthly sum crediting is an indexed annuity calculation method that measures the index's percentage change in each month of a crediting period, applies a monthly cap to each positive month, leaves negative months uncapped, and sums the twelve resulting figures to produce the period's index gain.
A mortality and expense charge (M&E) is the bundled annual fee on a variable annuity contract's account value that compensates the carrier for the mortality risk under the contract's death benefit and for administrative expenses, typically expressed as a percentage charged daily against subaccounts.
A multi-year guaranteed annuity (MYGA) is a deferred fixed annuity in which the insurer guarantees a fixed crediting rate for a specified multi-year guarantee period, after which the contract may be renewed at a new rate, surrendered, or annuitized into an income stream.
