GLOSSARY

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An individual or entity that can invest in securities that are not registered with financial authorities. These securities would also not be available to the public at large. The SEC (Securities and Exchange Commissions) refers to these investors as being financially sophisticated, with less need for regulatory disclosure. 

A contract, purchased through an insurance company, that guarantees income in exchange for a payment or series of payments. Designed to provide income for life or a set period. They are structured to be customizable, to include lifetime income protection or a death benefit. 

A mortality and expense risk charge, is a fee that insurance companies charge to investors for annuities and other products. 

Normally associated with real estate, it is also used to determine the R.O.R. (rate of return), as it relates to non-real estate investments. This figure is expressed  as a percentage. 

                                        Cap Rate = net operating income/market value

A fee imposed onto a life insurance policy holder upon cancellation of their of their policy. Used for covering the cost of keeping the insurance policy on the insurance provider's books. 

A monetary adjustment to an annuities value, when funds are withdrawn, during the surrender charge period. It is the difference between the interest rate, form when the annuity was purchased and when the funds are withdrawn. 

The percentage of interest gains that an insurance company deducts, before applying interest to an annuity. AKA margins

Guarantees a set rate of return and income payments for a specific period of time. Because of the "fixed" nature, the insurance company bares all of the risk, regardless of how the markets perform.  

A structured annuity that allows for market growth opportunities with built-in protections against loss. The customer chooses a buffer level (ex: 8%). If the market drops 10%, the investor only absorbs the remaining 2% rather than the entire amount. Returns are linked to a stock market index for a limited period. 

A long-term investment option that offers tax-deferred (not tax free) growth potential. It should be noted that, unlike fixed annuities, the risk of loss is assigned to the customer.

Property owned by a person or entity, known to have monetary value, which can meet the needs of financial commitments and/or legacies. 

More commonly found in short-term mortgage loans (5-10 years) and are known for having lower monthly payments, while holding out for a large payment at the end, called "The Balloon".