A

1. Amortization: The process of paying off debt through regular payments, which gradually reduces the outstanding balance over time.

2. Annual Percentage Rate (APR): The annual rate charged for borrowing or earned through an investment, including interest and other fees expressed as a percentage.

3. Annuitant: The person who receives or is entitled to receive payments from an annuity contract.

4. Annuity: A financial product typically offered by insurance companies that provide regular payments to an individual over a specified period, often used as a retirement income stream.

5. Asset Allocation: The distribution of investments across different asset classes such as stocks, bonds, and cash equivalents to achieve a desired risk and return profile.

B

6. Bear Market: A market condition characterized by declining stock prices over an extended period, typically accompanied by widespread pessimism among investors.

7. Beneficiary: A person or entity designated to receive the proceeds of an annuity upon the death of the annuitant.

8. Bull Market: A market condition characterized by rising stock prices over an extended period, typically accompanied by investor optimism and confidence.

9. Budget: A financial plan that outlines projected income and expenses over a specified period, typically on a monthly or yearly basis.

C

10. Compound Interest: Interest calculated on the initial principal and any accrued interest, resulting in exponential growth of an investment over time.

11. Contract Owner: The individual who owns an annuity contract and is responsible for making contributions and managing the annuity.

12. Credit Score: A numerical representation of an individual’s creditworthiness, based on credit history, debt levels, payment history, and other factors.

13. Cryptocurrency: Digital or virtual currencies that use cryptography for security and operate independently of central banks or governments, with Bitcoin being the most well-known example.

D

14. Death Benefit: A feature of some annuity contracts that provides a payment to the beneficiary upon the death of the annuitant, typically a lump sum or continuation of payments.

15. Debt-to-Income Ratio (DTI): A financial ratio calculated by dividing total monthly debt payments by gross monthly income, used by lenders to assess a borrower’s ability to manage debt.

16. Deferred Annuity: An annuity contract in which payments to the annuitant are delayed until a future date, typically used as a retirement savings vehicle.

17. Distribution Phase: The period during which payments are made to the annuitant or beneficiary from an annuity contract, often occurring after the accumulation phase.

18. Diversification: Spreading investments across different asset classes, industries, and geographic regions to reduce risk and increase the potential for returns.

19. Dividend: A portion of a company’s earnings distributed to shareholders as a return on their investment, typically paid out regularly on a quarterly basis.

E

20. Equity: The ownership interest in a company represented by shares of stock, calculated as total assets minus total liabilities.

21. Exchange-Traded Fund (ETF): A type of investment fund that trades on stock exchanges like a stock, holding assets such as stocks, bonds, or commodities and typically designed to track an index.

Exclusion Ratio: A tax calculation used to determine the portion of each annuity payment that is considered a tax-free return of principal versus taxable income.

F

23. FICO Score: A credit score developed by the Fair Isaac Corporation used by lenders to assess credit risk and determine eligibility for loans and credit cards.

24. Fixed Annuity: An annuity contract that guarantees a fixed rate of return or fixed payments to the annuitant, often providing stability and predictability.

25. Fixed Income: Investments that provide a fixed return, such as bonds and certificates of deposit (CDs), typically offering regular interest payments over a specified period.

26. Free-Look Period: A specified period after purchasing an annuity during which the contract owner can cancel the contract without penalty and receive a full refund of premiums paid.

G

27. Gross Domestic Product (GDP): The total monetary value of all goods and services produced within a country’s borders over a specified period, often used as a measure of economic health.

28.401(k): A tax-advantaged retirement savings plan offered by employers that allows employees to contribute a portion of their pre-tax income to a retirement account, often with employer matching contributions.

H

29. Hedge Fund: An investment fund that employs various strategies to generate returns for investors, often using complex financial instruments and techniques to hedge against market risk.

30. Home Equity: The value of ownership in a home, calculated as the current market value of the property minus any outstanding mortgage debt.

I

31. Immediate Annuity: An annuity contract in which payments to the annuitant begin immediately or within a short period after the contract is purchased.

32. Income Rider: An optional feature or rider added to an annuity contract that guarantees a minimum level of income payments to the annuitant, often used for retirement income planning.

33. Index Fund: A type of mutual fund or ETF that tracks a specific market index, such as the S&P 500, providing broad exposure to a diversified portfolio of stocks with low fees.

34. Inflation: The rate at which the general level of prices for goods and services rises over time, eroding purchasing power and reducing the value of money.

J

35. Joint Account: A bank or investment account held by two or more individuals who have equal rights to deposit, withdraw, and manage the funds in the account.

36. Joint Survivor Benefit: a provision in retirement plans, pensions, annuities, or life insurance policies that allow the primary annuitant or policyholder to ensure continued financial support for a designated beneficiary, typically a spouse or partner, after their death.

K

37.401(k): A tax-advantaged retirement savings plan offered by employers that allows employees to contribute a portion of their pre-tax income to a retirement account, often with employer matching contributions.

L

38. Liquidity: The ease with which an asset can be converted into cash without significantly impacting its market price, often used to measure how quickly an investment can be bought or sold.

39. Loan-to-Value Ratio (LTV): A financial ratio used by lenders to assess the risk of a mortgage loan by comparing the amount of the loan to the appraised value of the property.

40. Lump Sum: A one-time, single payment made to purchase an annuity contract or received as a distribution from an annuity.

M

41. Mutual Fund: An investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities, typically managed by professional fund managers.

N

42.Net Worth: The difference between an individual’s assets and liabilities, representing their overall financial position or wealth.

43.NASDAQ: A global electronic marketplace for buying and selling securities, known for its technology-heavy index and listing of many technology and internet-related stocks.

O

44. Options: Financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a specified time frame.

P

45. Payout Period: The duration over which annuity payments are made to the annuitant or beneficiary, typically specified in years or for the annuitant’s lifetime.

46. Personal Finance: The management of an individual’s financial resources, including budgeting, saving, investing, and planning for retirement and other financial goals.

47. Portfolio: A collection of investments owned by an individual or institution, typically diversified across various asset classes to spread risk and achieve specific financial objectives.

48. Premium: The initial or ongoing payments made by the contract owner to purchase and fund an annuity.

49. Principal: The original amount of money invested or borrowed, excluding any interest or dividends earned or paid.

Q

50. Qualitative Analysis: A method of evaluating investments or financial markets based on subjective factors such as management quality, brand reputation, and industry trends.

R

51. Rate of Return: The percentage gain or loss on an investment relative to the initial amount invested, often used to measure investment performance over a specific period.

52. Retirement Account: A tax-advantaged investment account designed to help individuals save for retirement, such as an IRA (Individual Retirement Account) or 401(k) plan.

53. Rider: An optional feature or add-on to an annuity contract that modifies the terms or provides additional benefits, such as a death benefit or income guarantee.

Performance.

S

54. Savings Account: A deposit account held at a bank or financial institution that pays interest on deposited funds, typically used for short-term savings and emergency funds.

55. Solvency: The ability of an individual or entity to meet its long-term financial obligations, often assessed by comparing assets to liabilities.

56. Standard & Poor’s 500 (S&P 500): A market-capitalization-weighted index of the 500 largest publicly traded companies in the U.S., widely used as a benchmark for the overall stock market performance.

57. Stock: A type of security that represents ownership in a corporation, entitling the holder to a proportionate share of the company’s assets and earnings.

58. Surrender Charge: A fee charged by the insurance company for withdrawing funds from an annuity contract before the end of the surrender period, typically declining over time.

T

59. Tax Deduction: A reduction in taxable income that lowers the amount of income subject to taxation, typically resulting in lower tax liability for the taxpayer.

60.Tax-Deferred Growth: The tax advantage of annuities that allows investment earnings to grow tax-deferred until withdrawn, potentially resulting in greater accumulation over time.

61.Time Value of Money: The concept that money available today is worth more than the same amount in the future due to its potential earning capacity through interest or investment returns.

U

62.Underwriting: The process by which lenders assess the risk of providing financing to borrowers, including evaluating creditworthiness, determining loan terms, and setting interest rates.

V

63.Variable Annuity: An annuity contract that allows the annuitant to invest in underlying investment options, with payments fluctuating based on investment performance.

64. Variable Annuity Living Benefit Rider: A rider added to a variable annuity contract that guarantees a minimum level of income payments to the annuitant, regardless of investment performance.

Types of IRAs:

• A Traditional IRAis a tax-advantaged personal savings plan where contributions may be tax deductible.
• A Roth IRAis a tax-advantaged personal savings plan where contributions are not deductible but qualified distributions may be tax free.
• A Payroll Deduction IRAplan is set up by an employer. Employees make contributions by payroll deduction to an IRA (Traditional or a Roth IRA) they establish with a financial institution.
• A SEPis a Simplified Employee Pension plan set up by an employer. Contributions are made by the employer directly to an IRA set up for each employee.
• A SIMPLE IRA planis a Savings Incentive Match Plan for Employees set up by an employer. Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions, and the employer makes matching or nonelective contributions.
• A SARSEP– the Salary Reduction Simplified Employee Pension Plan – is a type of SEP set up by an employer before 1997 that includes a salary reduction arrangement.