Annuities, What Seniors Need to Know

15 Common Terms Accumulation period —The time period when you pay into your annuity. Annuitant —The person who gets income payments from an annuity (such as you or your beneficiary/ survivor). Annuitization period —The period when you get income payments from your annuity. Cash value —The amount of money you get when you cash out or surrender your whole annuity. Deferred annuities —Annuities that provide income payments that start at least one year, and usually many years, in the future. Fixed annuities —Annuities that grow at a minimum rate set by the insurance company. The rate may be set for only 1 year or for up to 10 years. Free look —The right of the buyer to have a period to examine an annuity product and, if not satisfied, return it to the company for a full refund. Seniors have a 30-day free-look period. Immediate annuities —Annuities providing income payments that start within a year after you buy the annuity. Non-tax-qualified annuity —An annuity that you buy with after-tax dollars. Premium —The payments you make to an insurance company to buy an annuity. You may make one premium payment, or multiple payments. Surrender charge —The fee charged if you take money out of your deferred annuity within a certain period, such as 10 years. The surrender charge can be high. You may be able to take out some money without paying a surrender charge. Tax deferral —The money in your annuity grows tax-deferred. This means that you do not pay taxes on it until you begin receiving income payments. Tax-qualified annuity —An annuity that you buy with pre-tax dollars. Variable annuities —Annuities with rates that vary, depending on how the annuity is invested.