Defined terms for the annuity market and lifetime income landscape.
An enhanced death benefit rider is a rider on a deferred annuity that provides death-benefit features beyond the standard guaranteed minimum — a step-up to a high-water mark, a roll-up at a specified rate, or an earnings enhancement — in exchange for a separately disclosed rider charge.
An enhanced earnings benefit is an optional rider on a deferred annuity contract that pays the beneficiary an additional amount at the contract owner's death, calculated as a percentage of the contract's investment earnings, intended to offset the beneficiary's income-tax burden on those earnings.
Exclusion ratio is a tax computation applied to income payments from a non-qualified annuity that determines the portion of each payment treated as a nontaxable return of the contract owner's after-tax investment, with the remaining portion taxed as ordinary income.
Fee-based is a compensation model in which a financial professional is paid through ongoing fees — typically a percentage of assets under management or a flat retainer — rather than through commissions on individual placements, distinguished from fee-only by the possibility of accepting commissions.
A fixed account is the component of an annuity contract that credits a declared interest rate, supported by the assets of the insurer's general account, available within indexed annuities and variable annuities as one of the available crediting choices alongside index-linked or subaccount options.
