Contract Alerts

In order to present information as concisely as possible, AnnuityInsight uses abbreviations of common terms. Below is a list of abbreviations with, when necessary, accompanying definitions. Many of the contract terms apply to both VAs and SALBs. We have divided them into three categories:

1. Basic Contract Terms
2. Additional Guarantees
3. Common Feature Characteristics

Basic Contract Terms

• Admin: Administration Fee. Assessed to cover operational administration costs for the contract.
• CDSC: Contingent Deferred Sales Charge. The deferred sales charge that may apply when a full or partial surrender occurs in excess of the free withdrawal percentage.
• DCA: Dollar Cost Averaging
• SWO: Systematic Withdrawal Option. Allows an investor to schedule the amount and frequency of regular withdrawals from the AV. Often subject to MVA and may be considered income and subject to CDSC.
• M&E: Mortality and Expense Fee. Assessed to cover the mortality risk and charges for the contract.
• MVA: Market Value Adjustment. A formula for adjusting guarantee period values that applies to amounts used to purchase an annuity option on the annuity date, partial or total withdrawals, or transfers before the end of the guarantee period. The adjustment reflects the change in the value of the guarantee period value due to changes in interest rates.
• PP: Purchase Payments. Amounts paid to the Company as consideration for the Contract.
• Pros: Prospectus
• RMD: Required Minimum Distribution. Refers to minimum withdrawal amounts that must be taken from qualified plans when owners turn 70½.
• SAI: Statement of Additional Information

Additional Guarantees

• DB: Death Benefit. The amount payable if the Contract Owner, joint Contract Owner or the Annuitant dies before the Annuity Commencement Date.
• EEB: Enhanced Earnings Benefit. Pertains to death benefits only, applies an additional percentage to contract earnings to help defray the expenses from taxes payable on death benefit proceeds paid out under the contract. The percentage of the benefit generally varies by policyholder age.
• LB: Living Benefit. Any guarantee that provides value to the contract owner/policyholder/annuitant while alive, as opposed to a death benefit. Benefits may be available as combinations of multiple benefits for a single charge.
• GMAB: Guaranteed Minimum Accumulation Benefit. After a specified waiting period, often ten years, guarantees that the contract’s account value will be no less than a certain value. Often the initial benefit base is initial PP and sometimes applies PP received in the first years with declining protection on PP received thereafter.
• GMWB: Guaranteed Minimum Withdrawal Benefit. A guaranteed maximum annual withdrawal percentage available to a contract owner regardless of account value. In a general sense, the term often embraces GLWBs (below).
• GLWB: Guaranteed Lifetime Withdrawal Benefit. A withdrawal guarantee that continues to provide payments after the benefit value is depleted; spousal versions continue payments until the death of the second spouse.
• GMWB/LTC: GMWB or GLWB with a Long-Term Care clause that, under certain criteria, increases withdrawal rates by a given factor without negatively impacting the guaranteed lifetime withdrawal percentage. Generally requires a waiting period before usage.
• GMIB: Guaranteed Minimum Income Benefit. Guarantees minimum base for annuitization through stepped up and/or rising floor models.
• GPAF: Guaranteed Payout Annuity Floor. Guarantees each annuity payment will never be less than some percentage of the first guaranteed minimum annuity payment amount.
• Longevity Benefit: Guarantees deferred annuity payments for life.

Common Feature Characteristics

• AV: Account value. The total value of the Account.
• ROP or PR: Return of Principal
• SU: Stepped Up. Account value is calculated at specified intervals or anniversaries, most commonly one, five, or seven years allowing the contract holder to lock in the maximum anniversary value.
• MAV: Maximum Anniversary Value. Steps up to the highest anniversary value.
• RF: Rising Floor. Specific percentage added to guarantee value at stated intervals. Insures a minimum floor regardless of investment option performance.
• SR: Stepped Up/Rising Floor. The combination of SU/RF usually offers the greater of either of these two benefits.

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