Defined terms for the annuity market and lifetime income landscape.
Statutory accounting principles, often shortened to SAP, are the specialized accounting standards that US insurance carriers use for the financial statements they file with state insurance regulators, designed to measure a carrier's solvency rather than its profitability.
Statutory surplus is the amount by which an insurance carrier's admitted assets exceed its statutory liabilities, representing the regulatory capital cushion that supports new business, absorbs adverse experience, and determines the carrier's capacity to write and back new contracts.
A step-up provision is a rider mechanic that periodically resets the benefit base — or another rider-defined value such as a guaranteed minimum death benefit — to a high-water mark of the contract's account value at specified contract anniversaries, locking in past investment performance.
A straight life annuity is a lifetime income contract paying income for the contract owner's lifetime and stopping at death, with no beneficiary payments and no guaranteed minimum payment period.
Stretch provisions were the pre-SECURE Act rules that allowed a non-spouse beneficiary of an inherited retirement account or annuity to take required minimum distributions over the beneficiary's own life expectancy, extending tax deferral across the beneficiary's remaining lifetime.
