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January 4, 2017 - A Quick Guide to Common Insurance and Annuity Terms

January 11, 2017

The financial world is filled with confusing industry jargon and lingo. So, to help you get a hold of common terms you should know, we’ve put together a quick guide for your reference. From life insurance to annuities, use this glossary to understand the financial language in your life in 2017.

  • Abeyance: When the owner of a property or title has not been declared. With insurance, an abeyance occurs when the insurance holder has yet to name a single current beneficiary. As a result, a future situation or event will declare the new owner, leaving the ownership unfulfilled until that time. For example, you name future grandchildren as beneficiaries whom are not born yet, pushing the policy into abeyance until they are born.1
  • Account In Trust: A policy that one party manages for the benefit of another, such as for a minor. Life insurance paid into a trust means the death benefit goes to the trust rather than the estate.2
  • Asset: References an investment you own and paid money into, such as your insurance policy or annuity.3
  • Beneficiary: The person or trust named by the policy or annuity owner to receive life insurance or annuity distributions.4
  • Cash Surrender Value: When a policy or annuity owner closes their contract early and before it matures, the company pays this sum of money.5
  • Contingent Beneficiary: The person officially named by the contract owner to receive benefits should the primary beneficiary not receive the inheritance. This event occurs when the primary beneficiary is deceased, cannot be located, or refused the inheritance.6
  • Cost Basis: An asset’s original value for tax purposes. This value is usually the original purchase price — adjusted for stock splits, dividends, and return of capital.7
  • Expense Ratio: The calculated percentage of a fund’s assets used to pay its annual expenses.8
  • Free Look Period: When you purchase a new life insurance or annuity policy, you receive at least 10 days to cancel the policy for a full refund without any penalties.9
  • Lump-Sum Payment: An option that allows policy holders to receive a one-time payment of the assets’ whole value, rather than in recurring payments.10
  • Partial Redemption: When a policy holder chooses to withdraw some cash from the asset’s value while retaining a portion of the investment within that asset.11
  • Probate: The legal process that verifies if a will is valid and authentic.12

These terms represent a handful of many words and phrases associated with your insurance policies and annuities contracts. If you have any questions about terms you read in your statements or other communications, please contact us. We’re always happy to help provide you with the answers you need to make sense of your financial life.

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