A defined contribution plan offered by a corporation to
its employees, which allows employees to set aside tax-deferred
income for retirement purposes. The name 401(k) comes from the IRC
section describing the program.
A retirement plan similar to a 401(k) plan, but one
which is offered by non-profit organizations, such as universities,
governmental and tax-exempt organizations, and some charitable
organizations, rather than corporations.
Tax-deferred retirement plans that are maintained by state
and local governments or agencies or any non-governmental
organization exempt from income taxes and their
The mutual fund share class whereby the sales charge is
The period of time during which premiums are paid for the
purchase of a deferred annuity. It begins when the contract owner
purchases the annuity and ends when the contract owner begins to
receive benefit payments.
Accumulation Unit Value
A unit of measurement to determine the value of a cash
subaccount unit. This is determined by the same process as the NAV
(Net Asset Value) of mutual fund shares.
The costs of record keeping, mailings, maintaining a
customer service line, etc.
A legal agreement whereby one party, known as the agent,
is authorized to perform certain acts for another party, known as
A party that is authorized to perform certain acts for
another party, known as the principal.
A career agent who places business with more than one
Aggressive Growth Fund
A mutual fund that buys shares in companies that have the
potential for explosive growth. These shares also have the
potential to go bankrupt suddenly, so these funds tend to have high
The named individual whose lifetime is used in determining
the length of time the annuity payments will be paid.
A payout option that involves payments tied to a life
The date on which the insurer begins to make annuity
A written contract under which the contract owner pays a
premium or series of premiums to the insurer and, in exchange, the
insurer promises to make a series of periodic payments to the
contract owner starting on a specified date.
An annuity that is payable for a stated period of time,
regardless of whether the annuitant lives or dies (if the annuitant
dies before all the payments are made, the remaining payments are
made to the annuitant's beneficiary).
A legally enforceable written agreement under which an
insurer promises to maker a series of periodic payments to a named
person, starting on a specified date, in exchange for a premiums or
series of premiums paid to the insurer.
The time span between each of the payments in the series
of periodic annuity benefit payments.
An increase in an investment's value.
The process of investing funds in different asset
Asset Allocation Model
A tool that uses an investor's personal and financial data
to generate options for strategically allocating investment
A group of similar investment instruments linked by
Asset Management Fee
A fee charged on variable annuities by insurers to cover
the management costs and operating expenses associated with the
underlying investment funds.
Automatic Asset Reallocation
A variable annuity contract provision that states that
values automatically will be transferred between specified
subaccounts to maintain the allocation percentages designated by
the contract owner.
A fund service giving shareholders the option to purchase
additional shares using dividends and capital gains.
A back end loaded mutual fund that assesses a sales charge
upon redemption of any shares. This sales charge is often referred
to as a contingent deferred sales charge or CDSC.
A provision that enables the contract owner to surrender
the annuity contract, usually without a surrender charge, if
renewal interest rates on a fixed annuity fall below a
pre-established level, typically 1 percent below the initial
The goal of a balanced fund is to grow principal and
generate income. These funds invest in stocks, bonds, and money
market securities. Balanced funds seek to moderate risk and
generate consistent returns.
A basis point is equal to .01% of a bond yield. An
increase of 100 basis points will be a 1% increase in
Money that has not been taxed previously. This could also
be referred to as pre-tax.
The individual the contract owner has named to receive any
death benefits that are payable upon the death of the contract
owner or annuitant.
The price at which a mutual fund's shares are redeemed or
bought back by the fund. The bid or redemption price is usually the
Stock of a large, well-established company usually with
consistent profit growth. Examples include IBM and GE.
The debt instrument of a corporation or government entity
that promises to pay you a specified amount of interest for a
specified time period, with principal to be repaid when the bond
matures (some bonds called zero-coupon bonds do not make regular
A volume based percentage discount in the load fee charged
by a security. Larger amounts invested qualify for increasingly
A firm that buys and sells mutual fund shares and other
securities from and to investors.
A share class for which a level load on redeemed shares
is charged for a certain time period, in some instances for only
An upper limit on the amount of an index's gain in value
that will be credited to a fixed index annuity.
An increase in the market value of invested
The profit derived from selling a
security at a higher price than that which was paid to acquire
Highly liquid assets with short-term obligations, Treasury
Bills for example.
Cash Surrender Value
The accumulated value less any surrender charges and other
applicable deductions for an annuity contract or life insurance
A mutual fund that no longer issues
shares. Normally, a fund will close because the fund's manager
feels there are a limited number of good investments left or
because the fund needs to keep net assets low enough to enter and
exit holdings quickly.
A type of fund with a fixed number of shares. Shares of
closed-end funds are bought and sold through an exchange like the
New York Stock Exchange, not through the fund itself. The large
majority of mutual funds are open-end funds, not
A fee paid by an investor to a broker
or other sales agent as part of the cost to purchase a security or
other financial instrument.
Securities that represent an ownership interest and give
voting rights in the issuing corporation.
Interest earned not only on your original investment, but
on your accrued earnings as well.
Contingent Deferred Sales
A fee imposed when mutual fund shares are redeemed (sold
back to the fund).
A method of plan valuation in which a participant's
account is valued each business day (opposite of balance
Death Benefit Guarantee
An annuity contract provision that states if the
contract owner dies before the annuity payments begin, then the
beneficiary named by the contract owner will receive an annuity
benefit equal to the greater of the premiums paid for the contract
or the contract value.
A type of annuity that delays annuity benefit
payments more than one annuity period after the date on which the
annuity was issued.
Defined Benefit Plan
A retirement plan where the benefit is determined based on
a formula specified in the plan. The benefit is usually stated as
an average percent of compensation over a defined period of
A retirement plan where the annual contribution is
specified in the plan. Benefits are determined by the value of the
individual employee's allocated account at the time of distribution
The disbursement of capital gains and dividend income from
a mutual fund account. This can also reference activities that
sellers engage in to make products available for consumers to
Investing in different companies in various industries or
in several different types of investment vehicles to spread
Payments made by a corporation to its shareholders, or by
a mutual fund to its shareholders resulting from the income and
dividends from the fund's investments. The amount received is based
on the number of shares owned.
Strategy that diversifies the prices of a security by
buying a specific amount over set intervals.
Dow Jones Industrial
The Dow Jones Industrial Average is a stock index made up
of 30 "blue-chip" stocks that are generally considered to be among
the leaders in their industries. It includes companies like
American Express, General Electric, AT&T and DuPont.
The amount that a bond's issuer must repay at the maturity
Family of Funds
A group of mutual funds, each typically with its own
investment objectives, managed and distributed by the same fund
ERISA defines a fiduciary as anyone who exercises
discretionary control or authority over plan management or plan
assets, anyone with discretionary authority or responsibility for
the administration of a plan.
A variable annuity subaccount that guarantees
payment of a fixed rate of interest for a specified period of
What is a Fixed Annuity
A type of annuity for which the insurer guarantees to pay
a specified rate of interest on the annuity account value for a
specified period of time.
Fixed Indexed Annuity
A type of fixed annuity in which interest may be credited
based on value allocated to a fixed account, and/or index accounts
for which interest credits are based on the change in a financial
index during a specified time period.
A type of annuity payment, which guarantees that the
payment will remain the same during the payout period.
An annuity payout option under which the insurer
makes annuity payments for a specified period of time.
An amount of money that has been invested plus the
investment returns over a certain period of time.
The general fund of assets invested to support an
insurer's traditional insurance products
A fund that invests in both foreign and domestic
securities. These funds differ from traditional international funds
because they can keep a significant portion of their assets in U.S.
stocks and bonds.
Growth and Income Funds
The goal of growth and income funds is to grow the
principal and generate some income. These funds buy shares in
companies that have modest prospect for growth and provide
attractive dividend yields.
The goal of growth funds is capital growth, but may
also seek dividend income. These funds buy shares in companies that
are growing rapidly but are probably not going to go out of
business too quickly.
The stock of a firm generally growing faster than the
economy or market norm. The risk tends to be high.
Guaranteed Minimum Interest
The minimum interest rate that the insurance company
specifies that it will pay on a fixed annuity's principal balance
for the duration of the annuity contract.
A GIC is an investment option offered by insurance
companies. This issuer promises to pay a fixed rate of
interest and to return principal after a specified term.
The date a security was first available.
Dividends, interest, and/or short-term capital gains paid
to a mutual fund's shareholders. Income is earned on a fund's
investment portfolio after deducting operating expenses.
A distribution to a security's shareholders of the
accumulated net income from investments.
Common stock of a company that pays out a relatively
large portion of earnings as dividends, resulting in a high yield
for investors. Income stocks offer lower risk than growth
A hypothetical, unmanaged, often weighted portfolio
of securities, the performance of which is used as a benchmark in
measuring performance of actual securities such as mutual funds or
of markets in general.
The goal of an index fund is to match the performance of
its benchmark index by investing in the same securities that
comprise the index. Index funds can be based on bond or stock
A company that issues insurance products such as
life insurance and annuities.
The fees that bond issuers, banks, and other financial
institutions pay for the use of borrowed money. Also, the amount
credited by an insurer pursuant to the terms of a life insurance
policy or annuity contract.
Mutual funds that Invest in stocks and/or bonds issued
outside the countries in which the funds are registered.
An organization engaged by a mutual fund to give
professional advice on the fund's investments and asset management
practices, and make investment decisions for the fund.
A corporation, trust or partnership that invests pooled
shareholder dollars in securities appropriate to the organization's
The stated investment goal that a mutual fund seeks to
obtain, such as current income or long-term capital
A company that issues insurance products such as life
insurance and annuities.
Mutual fund share that typically has a shorter CDSC period
(3-5 years) and typically pays an upfront commission plus a
What are Large cap stock funds?
Stocks of large capitalization companies, which are
generally considered to be companies whose total outstanding shares
are valued at $10 billion or more (though the value threshold
changes over time).
A salesperson who is not under an agency contract with any
insurance company and who is acting as an agent of the
An annuity that provides periodic payments for at least
the lifetime of the annuitant.
Life Income with Period Certain Annuity
A type of annuity that guarantees that payments will be
made throughout the annuitant's lifetime, but also guarantees that
the payments will be made for at least a certain period: if the
annuitant dies before the end of that period, the remaining
payments are made to the beneficiary.
The ability to have ready access to money without loss of
A sales fee that is charged when mutual fund shares are
purchased (front-end) or sold (back-end).
The type of sales charge on a particular security
investment. There are basically three types of loads: front-end,
back-end, and level.
Lump Sum Distribution
A payout option by which a contract owner receives the
balance of his account in a single payment.
The money paid to the manager(s) of a mutual
The risk associated with fluctuations in prices of the
securities in a particular type of market.
Buying and selling a security based on a prediction of
future market movement.
The current share price of a security.
Mid Cap Stock Funds
These funds buy shares of medium-size companies, generally
those with market capitalizations of between $2 billion and $10
An investment company consisting of funds pooled from
investors that are used to purchase securities.
Net Asset Value
A mutual fund share's value computed by subtracting total
fund liabilities from total fund assets and dividing by the number
of shares outstanding.
The difference between a mutual fund's total assets and
A mutual fund without a sales fee. However, there are
no-load funds that have fees for redemptions made within a short
period of time after the fund shares are purchased.
Retirement plans in which the premiums invested have
already been taxed. Plan earnings are tax deferred.
A contract provision required in individual deferred fixed
annuity contracts (if the contract includes a lapse provision),
providing that if the contract owner stops making premium payments
the owner will still receive an annuity benefit based on the amount
of premiums he has paid.
A collection of financial instruments owned by an
individual or an institution (such as a mutual fund) that may
include stocks, bonds and money market securities.
A specialist employed by a mutual fund's adviser to invest
the fund's assets in accordance with predetermined investment
Withdrawals of interest or variable subaccount gains from
an annuity made before the contract owner is age 59½.
The share price of a stock divided by the company's
earnings per share (EPS). The ratio shows how much investors are
willing to pay for each dollar of the company's
The total amount of premium the contract owner has paid
into an annuity, exclusive of any interest and/or variable
subaccount investment returns; in an agency relationship, a party
that authorizes another party, known as the agent, to perform
certain acts on its behalf.
A deferred charge imposed when a mutual fund share
is sold within a certain time period after being purchased. These
fees are normally used to prevent short-term investors from buying
and selling on a daily basis.
The use of any cash flows, i.e., dividends and capital
gains, from a security back to purchase an additional quantity of
The minimum amount that must be withdrawn, beginning
usually at age 70 ½, from a qualified retirement plan.
A retirement account whereby individuals who have earned
at least a certain amount income in a tax year may make
contributions with non-deductible after-tax dollars. The
contributions are not deductible, however neither earnings nor
contributions are taxable upon withdrawal.
S&P 500 Stock Index
A stock index comprised of 500 of the leading U.S.
companies as determined by Standard & Poor's based on specific
criteria such as market capitalization and financial
A mutual fund share class with an up front commission, a
multiple-year rolling CDSC and 0.25% trail commission beginning in
year two. S shares do not convert to another share class
after a specified number of years.
Sector mutual funds usually invest in a specific industry,
e.g., telecommunications. These funds allow the investor to invest
in a highly select industry.
Assets such as stocks, bonds, etc. which provide either an
ownership share - stocks - or a debt interest - bonds - in the
issuer of the security.
An investment account that is separate from the insurer's
general account and is used specifically to manage the funds placed
in variable products.
Classifications of the same mutual fund that charge
different fees. This can enable shareholders to choose the
type of fee structure that best suits their particular
An investor who owns shares of a mutual fund or other
A fractional portion of ownership in a company or mutual
Companies with market capitalization between $250 million
and $2 billion.
The ability of an insurer to make specified payments to
contract owners and to meet other financial obligations on
Difference between the Bid and Ask prices for a security.
Also, the difference between the insurance company's investment
return on assets allocated to a particular fixed index annuity
index account and the interest credited to the contract
Stocks can also be referred to as equities and represent
ownership in the company issuing the stock. Stock can be either
common or preferred.
A penalty for withdrawing funds from an annuity before a
specified number of contract years have elapsed.
A variable annuity allocation option that invests in an
underlying mutual fund.
When money is received for an annuity contract by Support
Services, the money remains in a "suspense" account until an
Annuity Administration associate accesses the contract and applies
The organization engaged by a mutual fund to prepare and
maintain records relating to shareholders' accounts.
Transferring money from a 403(b) or IRA annuity contract
at one company to a 403(b) or IRA annuity contract at another
company without causing a taxable event.
Short-term US government securities that have maturities
of less than one year that are sold at weekly auctions at a
discount and are redeemed at face value. The risk is considered to
Long-term US government securities that have maturities
between seven and 30 years. The risk with these investments is low
Medium-term US government securities that have maturities
of between 1 year and 10 years.
A trust is a legal entity managed for the benefit of a
person or persons. A Trust document is written while the
grantor is still living, setting out the terms of the
Represents the percentage of a mutual fund's holdings
that change every year. Because buying and selling stocks incurs
transaction costs, a high turnover rate usually indicates higher
costs (and lower shareholder returns) for the
The organization that sells a mutual fund's shares
to broker/dealers and investors.
A type of annuity under which the contract's value
fluctuates in accordance with the investment results of the
subaccounts in which the annuity funds are
Wilshire 5000 Index
A stock index comprised
now of more than 6,700 stocks of various market capitalization U.S.
companies. The index is weighted by market capitalization so that a
greater portion of the index is comprised of larger market
The fee, usually a percentage of the assets, charged by
an investment advisor or manager for a specific group of
Usually expressed as a percentage of the price of the
security, a measurement of the interest return from owning a