Glossary

A multi-year guaranteed annuity (MYGA) is a deferred fixed annuity in which the insurer guarantees a fixed crediting rate for a specified multi-year guarantee period, after which the contract may be renewed at a new rate, surrendered, or annuitized into an income stream. Why it matters The MYGA is the standard insurance-industry alternative to a certificate of deposit or a short-to-intermediate-term bond holding. Its structure is an accumulation product with a contractual rate gua

An NAIC model regulation is a non-binding template regulation produced by the National Association of Insurance Commissioners — an association of the chief insurance regulators of the U.S. states, territories, and the District of Columbia — that individual states may adopt, with state-specific modifications, to govern insurance activities within their jurisdiction. Why it matters The NAIC model regulation framework is the principal mechanism through which insurance regulation in t

A non-qualified annuity is an annuity contract held outside any tax-qualified retirement account, funded with after-tax dollars, in which the contract owner has cost basis equal to cumulative premium and in which distributions are split between non-taxable basis recovery and taxable ordinary-income gain. Why it matters The non-qualified classification is the half of the qualified/non-qualified distinction where the annuity wrapper's own tax features do meaningful work, because the

The nonforfeiture benefit is the contractually guaranteed minimum value that a contract owner can recover from a deferred annuity, established under state nonforfeiture law and operating as a floor on the amount the carrier may charge through surrender charges and other cost-structure mechanisms. Why it matters The nonforfeiture benefit is the regulatory floor on what a carrier may extract from a contract through surrender charges. It is the feature that makes deferred annuities l

Ordinary income treatment is the tax characterization under which the taxable portion of an annuity distribution is taxed at the contract owner's marginal ordinary income tax rates rather than at preferential long-term capital gains rates. Why it matters Ordinary income treatment is the rule that governs how the taxable portion of an annuity distribution is taxed, and it is independent of how those gains were generated inside the contract — whether through fixed interest, index cr