Defined terms for the annuity market and lifetime income landscape.
An advisory account is a brokerage or platform account in which the financial professional is compensated through an ongoing fee assessed against the account's assets — typically a percentage of assets under management — and in which the professional generally operates under a fiduciary standard.
An AM Best rating is a financial strength rating issued by AM Best Rating Services, the specialized rating agency that has historically been the primary source of insurer financial strength opinions in the United States.
Annual reset is a fixed indexed annuity crediting structure in which the index value is reset at each contract anniversary, with credited interest calculated from the index's movement during that annual period and locked in at the end, after which a new annual period begins from that reference.
Annuitization is the conversion of a sum of capital into a stream of periodic income payments, typically continuing for the lifetime of the contract owner, in exchange for surrendering the right to access the capital as a lump sum.
Annuitization rate is the specific conversion factor a carrier applies at the moment of annuitization to translate an accumulated account balance into a stream of income payments, reflecting the carrier's mortality assumption, investment yield expectation, and load structure on that date.
