Great American Financial Resources, Inc. - Glossary

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Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A
Accumulation Period - The period between the time you make your Purchase Payment and the time you make withdrawals, when your annuity is accumulating interest and value.

Administrative Fees - Fees that cover the cost of administering and maintaining an annuity contract or life insurance policy.

Annuitant - The person upon whose life expectancy the annuity payments are based.

Annuitization - Converting the value of the annuity contract into a stream of income, either for a lifetime or a specified period of time.

Annuity - A contract that can make payments to you at regular intervals based on Purchase Payments that you put into the contract.

Asset - Property owned that has value such as a home, car, or stocks and bonds.

Assisted Living Care - A type of long-term care that provides services in a residential facility. Services may include help with daily activities such as dressing, bathing, and eating. These services generally do not include the medical care provided in a nursing home. Residents often live in their own apartments and are afforded more independence than in a nursing home.

B
Base Interest Rate - The minimum indexed interest rate you earn during a term for a fixed-indexed annuity.

Beneficiary - The person, institution, trustee, or estate that you designate to receive benefits from your annuity or life policy if you die.

C
Cap - The maximum indexed interest rate that can be credited during a term of a fixed-indexed annuity.

Cash Value - The amount payable upon cancellation of a policy or contract. You may also be able to borrow against this amount.

Community Care - A variety of services provided in the community for those who need extra assistance with daily activities. These may include adult daycare, meal services, and transportation and are designed to help the individual stay in his/her own home.

Contract Anniversary - The anniversary of the day the contract was issued.

Contract Owner - The person who purchases the annuity and has all rights to the contract.

Custodial Care - Care that assists in performing everyday activities such as bathing, dressing, and eating. When someone receives custodial care, reasonable homemaker services such as cleaning, washing dishes, doing laundry, and shopping are also covered.

D
Death Benefit - With respect to annuities, this provision typically states that if you die before the annuity payments start, the contract value will be paid to your beneficiary. With respect to life insurance, it is the amount payable to the beneficiary under the policy upon the death of the insured.

Declared Interest Rate - A rate set by the Company at the start of a term of a fixed-indexed annuity contract.

Declared Rate Strategy - Credits interest daily at a rate declared in advance of a term for a fixed-indexed annuity contract.

E
Early Withdrawal Charge - Often referred to as a Surrender Charge, this is a percentage of the value of the contract, or of Purchase Payments paid, and takes effect if you withdraw the full or partial value of the contract during the stated early withdrawal period. The percentage may be reduced or eliminated after the contract has been in force for a certain number of years.

Easy Systematic Payment Program - A non-contractual program in which you have the option to request regular income payments from your annuity before the early withdrawal charge period ends.

F
Face Amount - The amount for which the policy is issued that can be paid out when a covered claim is made.

Fixed Annuity - This type of annuity offers the stability of a fixed interest rate that is determined by the Company and is guaranteed never to be below a minimum interest rate.

Fixed-Indexed Annuity - A variation of a traditional fixed annuity that gives you the opportunity to earn interest at an interest rate that is determined according to a formula based, in part, on the change of a referenced index.

Flexible Premium Annuity - An annuity that accepts periodic contributions, which can usually be made at any time.

Free Look Period - Period of time after an annuity contract, life policy, or supplemental health policy is issued and delivered when the owner may cancel the policy or contract without penalty and receive either the initial payment or the current value of the annuity.

G
Guaranteed Death Benefit - Death benefits that are guaranteed to be paid to the beneficiary/beneficiaries under certain annuity contracts, provided the contract owner satisfies all Purchase Payment and contract requirements.

H
Home Care - A type of long-term care that provides services in an individual's home. Services may include help with daily activities such as dressing, bathing, and eating. Services may also include health care provided by medical professionals.

I
Immediate Annuity - An annuity that can give you access to a stream of income immediately after you purchase it.

Indexed Interest Rate - Interest is determined and credited to the amount assigned to an indexed strategy on the last day of the term using a formula that is based on the index growth for a term of a fixed-indexed annuity contract.

Index Method - The method for measuring index growth of a fixed-indexed annuity contract.

Intermediate Care - Prescribed care that can be provided on an intermediate rather than a continuous basis, such as the need for diagnostic or rehabilitative services.

Issue Age - The age of the policyholder at the time the policy is issued.

J
Joint and One-Half Survivor Annuity - This annuity option offers payments of a fixed amount over the lifetimes of two payees. After the death of the primary payee, the secondary payee receives 50 percent of the original payment amount for the remainder of his or her lifetime. If the secondary payee is the first to die, there is no reduction in the payment.

L
Limited Benefit - A policy with limitations on the costs and services it will cover. Also known as a restricted benefit.

Long-Term Care Insurance - A policy that provides for daily assistance on a continuing basis when you can no longer care for yourself due to illness, injury, disability, or age. A comprehensive plan will pay for services in a variety of settings - including those provided at home.

M
Medicaid - A federal and state health insurance program for low-income individuals.

Medicare - A federal health insurance program primarily for those age 65 and over.

Medicare Supplement Insurance - Insurance designed to supplement the Original Medicare Plan (Medicare Part A and/or Part B) that helps pay for out-of pocket expenses. In most states plans must be one of 12 standardized policies. Also known as Medigap.

Medigap - Insurance designed to supplement the Original Medicare Plan (Medicare Part A and/or Part B) that helps pay for out-of pocket expenses. In most states plans must be one of 12 standardized policies. Also known as Medicare Supplement Insurance.

Monthly Averaging Method - Compares the average of the index value during the previous 12 months of the term, if the term is one year, to the first day of that term to determine the index growth for a fixed-indexed annuity contract.

N
Non-Participating Individual Life Insurance Policy - A policy that does not pay dividends.

Non-Qualified Annuity - A tax-deferred annuity purchased with after-tax dollars rather than as part of a tax-qualified retirement plan, such as an IRA.

Nursing Home Care - A type of long-term care that provides services in a residential facility. Services may include help with daily activities such as dressing, bathing, and eating. Services may also include health care provided by medical professionals. A nursing home is an option if an individual needs more care than can be provided at home and the acute care a hospital provides is not appropriate.

O
Out-of-Pocket Expenses - Payments for services that must be made by the insured, such as deductibles, co-payments, co-insurance, and services not covered by the plan.

P
Partial Withdrawal - An amount withdrawn from an annuity contract that may be subject to fees and taxes.

Participation Rate - The percentage of net index growth that is used to calculate the indexed interest rate for a fixed-indexed annuity contract.

Participating Life Insurance Policy - A policy that pays dividends.

Permanent Life Insurance - A category of life insurance that can provide protection for your lifetime, including whole life and universal life.

Point-to-Point Method - Compares the value of the index on the last day of the term to the first day of that term to determine the index growth for a fixed-indexed annuity contract.

Premium - A regular payment made by the insured to the plan in exchange for coverage. It might be paid annually, biannually, monthly, quarterly, or in a single payment.

Purchase Payment - The amount you pay in exchange for an annuity contract.

Q
Qualified Annuity - An annuity contract bought with pre-tax dollars as part of a tax-qualified retirement plan.

R
Required Minimum Distribution (RMD) - The minimum annual required distribution amount for an IRA holder who reaches age 70½.

Restricted Benefit - A policy with limitations on the costs and services it will cover. Also known as a limited benefit.

S
Settlement Options - Income payment plans you can choose when annuitizing your contract or your beneficiary can choose at the time of a claim under a life policy.

Single Premium Annuity - An annuity contract that accepts a single Purchase Payment.

Skilled Care - Twenty-four-hour prescribed care provided by licensed medical professionals who are under the direct supervision of a physician.

Supplemental Health Insurance - A plan designed to be used in conjunction with existing health insurance or Medicare that helps pay for out-of-pocket expenses. Plans may include those for cancer, heart disease, and accidents and those supplementing the original Medicare plan.

T
Tax-Deferral - Amounts in your annuity are untouched by current federal income tax during the accumulation period; no tax is paid until you begin to receive income payments or make a withdrawal.

Tax-Qualified Policy - A plan that meets certain federal requirements. It can help reduce your taxable income, and, in some cases, the premium may be tax-deductible.

Term - For a fixed-indexed annuity: for a declared rate strategy, the period of time during which the interest rate is declared and cannot be changed; for an indexed strategy, the period over which an indexed interest rate is calculated.

Term Life Insurance - A policy where the premiums remain level for a fixed term, that provides a death benefit, and that is renewable. The policy has no cash value, but some may be able to be converted to a permanent policy.

U
Universal Life Insurance - This policy is similar to a whole life policy but offers flexible premium amounts and time of payment. Under certain circumstances, the amount of death benefit can be changed.

V
Variable Annuity - An annuity that allows the contract owner to determine how much of the Purchase Payment will be invested in a series of accounts, ranging from general subaccounts to a series of subaccounts tied to variable financial markets.

Variable Annuity Payout - Depending on the terms of an annuity contract, the annuitant may be able to select a variety of payout terms, including income for a fixed period; a life annuity with payments for at least a fixed period; joint and one-half survivor; or income for a fixed period, not to exceed life expectancy.

W
Whole Life Insurance - A policy that pays a death benefit. The policy builds cash value that you may be able to withdraw or borrow against before death. This policy is issued for life.

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