Defined terms for the annuity market and lifetime income landscape.
Beneficiary designation is the contract owner's formal specification of who is to receive the death benefit or remaining contract value on the death of the owner or annuitant, recorded with the carrier and controlling regardless of what the owner's will or trust documents provide.
A benefit base is the contractually defined value that a rider attached to a deferred annuity uses to calculate guaranteed benefits, operating separately from the contract's account value and following its own contractually specified rules for growth, step-ups, ratchets, and withdrawal effects.
Best interest standard is a producer conduct standard requiring that an annuity recommendation act in the individual's best interest, without placing the producer's or firm's interests ahead of the individual's, codified in the 2020 revision to the NAIC Suitability in Annuity Transactions Model.
Break-even analysis in the annuity context calculates how long an individual would need to receive lifetime income payments from an annuity to recover the premium paid, used as a heuristic for evaluating whether the annuity is likely to be advantageous.
A broker, in the annuity context, is a licensed intermediary who represents the prospective buyer rather than a specific insurance carrier and is generally authorized to sell annuity contracts from multiple carriers, with compensation typically received as a commission paid by the issuing carrier.
