Defined terms for the annuity market and lifetime income landscape.
A private placement annuity is an annuity contract designed for accredited or qualified purchasers that is not registered for general public offering, typically structured as a variable annuity with access to institutional investment strategies unavailable in registered products.
A qualified annuity is an annuity contract funded with pre-tax dollars inside a tax-advantaged retirement account — such as a traditional IRA, 401(k), 403(b), or similar plan — where the entire distribution is taxed as ordinary income when it comes out.
A qualified longevity annuity contract (QLAC) is a deferred income annuity purchased inside a qualified retirement account that meets specific Treasury requirements, allowing the premium to be excluded from required minimum distribution calculations until income payments commence.
A ratchet feature is a rider mechanic that locks in upward movements in the benefit base — or another rider-defined value — preventing subsequent decreases below the locked-in level, used in some contracts as a synonym for the step-up provision and in others as a distinct mechanic.
Real income is income expressed in constant purchasing-power terms, adjusting for inflation over time; nominal income is income expressed in the currency amounts actually paid, without inflation adjustment.
