Variable Annuity Comparison

Settlement Option: How a beneficiary is given disbursement of the death benefit. The company might pay one lump sum or institute a money market account in the recipient’s name and supply the recipient the option of leaving the funds in the account or withdrawing some or all of it.

Suicide Clause: A life insurance policy will not disburse a death benefit if the owner of the policy commits suicide within the initial two years after purchasing the policy.

Surrender Charge: If you cancel an annuity or life policy ahead of time, the company may subtract a fee from the sum it owes you.

TAMRA: Technical and Miscellaneous Revenue Act. A 1988 Federal law that formed a new category of life insurance contracts. The contracts’ policy loans and surrender costs are subject to taxation regulations comparable to deferred annuities.

Term Life: The most basic form of life insurance, it normally offers no cash value element. You pay a premium and the company guarantees to pay your beneficiary if you pass away. The policy lasts for a particular length of time or “term,” such as 1, 5, 10, 15 or some odd years, or to an elected age like 65 or 100. If you are still alive at the close of the term, the policy terminates unless the company concurs to restore it. Renewal premiums are dependent on your current age. Sometimes called “temporary insurance.”

Underwriting: The insurance company’s procedure for deciding whom it will insure. An underwriter’s verdict may be based on your application, physical exam, health records, and other information to conclude whether you meet the company’s standard.

Universal Life: A flexible-premium life insurance contract which accrues values and pays a death benefit. You select the policy’s premium and face total and you can alter these permitting the policy is in effect. It is feasible that the cash value will produce more than the guaranteed lowest interest rate. It is also feasible that the cash value will develop more rapidly than is necessary to cover the price of insurance.

Vanishing Premium: An insurance company’s prediction on an illustration signifying that your policy could accomplish a position where you would not have to pay premium payments because the policy would have sufficient cash value to encompass the premiums.

Variable Life: A sort of whole life insurance in which the face quantity and cash value count directly on the investment performance of a particular fund. Reserves are put in investment accounts that are disconnected from the company’s universal account. Most policies promise a lowest face sum, but a cash value minimum is hardly ever guaranteed.

Viatical Settlement: A concurrence to sell the rights of your life insurance policy to a different, unrelated person who becomes both the possessor and beneficiary of the policy.

Waiver of Premium: A stipulation that postpones your duty to pay premiums when you are immobilized or you meet some other policy prerequisite. This is a frequent feature in life insurance polices.

Whole Life: Life insurance with a savings aspect. Premiums normally are the same (rank) annually. When you are youthful, your premiums are more than the price of insuring your life at that point in time. The surplus amount builds up and resembles a savings account, called “cash value.” This surplus is utilized by the company to insure you in the future, when your level premium is not sufficient enough to cover you.