Defined terms for the annuity market and lifetime income landscape.
Suitability standard is a producer conduct standard requiring that an annuity recommendation be suitable for the individual based on information gathered about the individual's financial situation, needs, and objectives, without requiring that the recommendation be the best available option.
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of the contract's free withdrawal allowance during the surrender period, calculated as a percentage of the amount withdrawn under a typically declining schedule.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.
Surrender value is the amount an annuity contract owner would actually receive on a full surrender of the contract at a given point in time, equal to the contract's cash value less any surrender charges, market value adjustments, and other applicable deductions.
Systematic drawdown is a self-directed retirement income strategy in which an individual withdraws income from an investment portfolio according to a specified rule — typically a fixed real dollar amount or a fixed percentage of the current balance — over a planning horizon.
