Defined terms for the annuity market and lifetime income landscape.
A charitable gift annuity is a contract between a donor and a qualified charity in which the donor makes a gift to the charity in exchange for the charity's promise to pay the donor (or another designated annuitant) a fixed periodic income for life.
The contract anniversary is the annual recurring date corresponding to the contract issue date, used in deferred annuity contracts as the reference point for crediting period boundaries, free withdrawal allowance resets, surrender charge schedule progression, and other annual events.
Cost basis in the annuity context is the amount of after-tax money an individual has invested in a non-qualified annuity contract, representing the portion of the contract's value that can be returned tax-free during distribution.
A crediting spread is a fixed percentage subtracted from an underlying index's measured gain before the remaining amount is credited to an indexed annuity contract over a specified crediting period.
Daily averaging is an indexed annuity calculation method that takes the daily closing values of an underlying index across a crediting period, averages them, and uses the percentage change between the starting value and the period average as the basis for the credit applied to the contract.
