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Annuity Awareness Month: Annuity terms to know

Annuity Awareness Month: Annuity terms to know

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Annuity terms to know

As Annuity Awareness month continues in June, here are some terms you might need to know before you invest.

Accumulation phase: The period of time when the owner builds cash value in an annuity.

Annuitant: The annuitant is the person on whose life Annuity Payments are based.  Often, the annuitant is also the person who receives the benefits of the annuity..

Beneficiary: The person having the right to receive the death proceeds payable upon the death of the contract owner during the accumulation phase, and the person having the right to receive benefits upon the death of the annuitant during the annuity phase.

Deferred annuity: This annuity, which can be variable or fixed, delays payments until the owner elects to receive them. All or a portion of the payments are taxed upon withdrawal.

Distribution phase: The period of time when the owner takes money out of an annuity, either through withdrawals from the contracts or through Annuitization, which converts the cash value into a stream of payments

Fixed annuity: An annuity in which the accumulation results from fixed interest credits at declared rates.

Flexible premium annuity: A type of deferred annuity that permits flexible premium payments after the initial payment.

Immediate annuity: This annuity begins making payments to the owner as soon as the contract starts and has no accumulation phase.

Joint and survivor: An annuity with two or more annuitants in which payments continue as long as one of the annuitants is alive.

Life, with period certain: An annuity in which the owner receives a certain number of payments whether the annuitant lives as long as the scheduled payments or not.  So if the period of payments is scheduled for 25 years and the annuitant dies after 15 years, a beneficiary will receive the final 10 years of payments.

Period certain: An annuity that provides payments for a predetermined period of time.

Single (straight) life: An annuity that pays the owner as long as annuitant lives.

Variable annuity:  A deferred annuity contract that allows the contract owner to select the investment funds and assume the investment risk.

To learn more about annuities, find a OneAmerica financial professional.

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