Defined terms for the annuity market and lifetime income landscape.
A structured annuity is a deferred annuity that credits returns according to a defined payoff structure linked to a specified index or reference asset, incorporating designed downside protection features and typically registered as a security.
A subaccount is an investment option within a variable annuity contract, structurally analogous to a mutual fund, in which contract owner premiums are invested and from which the contract's accumulation value derives, with investment risk borne by the contract owner rather than by the carrier.
A surrender charge is a fee imposed by the carrier when a contract owner withdraws funds from a deferred annuity in excess of the contract's free withdrawal allowance during the surrender period, calculated as a percentage of the amount withdrawn under a typically declining schedule.
The surrender period is the defined number of years following the issue of a deferred annuity contract during which the surrender charge schedule applies, after which withdrawals are no longer subject to surrender charges.
Systematic withdrawal is a distribution mechanic in which the contract owner receives scheduled periodic payments from an annuity's account value — or, more broadly, from any retirement savings vehicle — without annuitizing, with the account retaining its balance and liquidity between payments.
