Helps cover:
Helps cover:
A type of Medicare health plan offered by a private company that contracts with Medicare. Medicare Advantage Plans provide all of your Part A and Part B benefits, with a few exclusions, for example, certain aspects of clinical trials which are covered by Original Medicare even though you’re still in the plan. Medicare Advantage Plans include:
Helps cover the cost of prescription drugs (including many recommended shots or vaccines). Plans that offer Medicare drug coverage (Part D) are run by private insurance companies that follow rules set by Medicare.
An agreement by your doctor, other health care provider, or supplier to be paid directly by Medicare, to accept the payment amount Medicare approves for the service as payment in full, and not to bill you for any more than the Medicare deductible and coinsurance.
The way that Original Medicare measures your use of hospital and skilled nursing facility services. A benefit period begins the day you’re admitted as an inpatient in a hospital or skilled nursing facility. The benefit period ends when you haven’t gotten any inpatient hospital care (or skilled care in a skilled nursing facility) for 60 days in a row. If you go into a hospital or a skilled nursing facility after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There’s no limit to the number of benefit periods.
An amount you may be required to pay as your share of the cost for benefits after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%).
An amount you may be required to pay as your share of the cost for benefits after you pay any deductibles. A copayment is a fixed amount, like $30.
Prescription drug coverage that’s expected to pay, on average, at least as much as Medicare drug coverage. This could include drug coverage from a current or former employer or union, TRICARE, Indian Health Service, VA, or individual health insurance coverage.
The amount you must pay for health care or prescriptions before Original Medicare, your Medicare Advantage Plan, your Medicare drug plan, or your other insurance begins to pay.
A Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, like premiums, deductibles, and coinsurance.
A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a drug list.
In Original Medicare, these are additional days that Medicare will pay for when you’re in a hospital for more than 90 days. You have a total of 60 reserve days that can be used during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.
Acute care hospitals that provide treatment for patients who stay, on average, more than 25 days. Most patients are transferred from an intensive or critical care unit.
A joint federal and state program that helps with medical costs for some people with limited income and (in some cases) resources. Medicaid programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.
Health care services or supplies needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.
The payment amount that Original Medicare sets for a covered service or item. Medicare pays its share and you pay your share of that amount.
The payment amount that Original Medicare sets for a covered service or item. Medicare pays its share and you pay your share of that amount.
Medicare Supplement Insurance sold by private insurance companies to fill “gaps” in Original Medicare coverage.
The periodic payment to Medicare, an insurance company, or a health care plan for health or prescription drug coverage.
Health care to prevent illness or detect illness at an early stage, when treatment is likely to work best (for example, preventive services include Pap tests, flu shots, and screening mammograms).
The doctor you go to first for most health problems. They may talk with other doctors and health care providers about your care and refer you to them.
A written order from your primary care doctor for you to visit a specialist or get certain medical services. Without a referral, your plan may not pay for services from a specialist.
An area you must live in for the plan to accept you as a member. For plans that limit which doctors and hospitals you may use, it’s also generally the area where you can get routine (non-emergency) services. Plans can, and in some cases must, disenroll you if you move outside their service area.
A nursing facility with the staff and equipment to give skilled nursing care and, in most cases, skilled rehabilitative services and other related health services.
Part of a life insurance policy that lets you access your death benefits while you’re still alive, usually to cover the cost of care if you were to have a terminal illness.
An insurance policy that pays out only if the insured dies in a covered accident. Some of the leading causes of accidental death include poisoning, auto accidents and falls.
Whole life insurance usually includes a death benefit as well as an accumulated value. This is the cash value that has built up over time plus any dividend value (including interest). As you pay your premiums over the years and earn more of a return, the accumulated value of your policy may grow.
The amount something is worth in its current condition. It’s a way to determine the value of an item when it got damaged or destroyed by considering its original cost minus depreciation from wear and tear.
A professional licensed by the state who has the authority to sell insurance. An agent can be independent and represent multiple companies, or a direct writer who sells policies for only one company.
A type of life insurance that covers you for a term of one year, then renews every year at an increasingly higher premium. A person might buy yearly renewable term life because he or she wants to cover only very short-term debts, or is between jobs and anticipates buying group life insurance through a future employer.
The person or persons who will receive the death benefit of your life insurance policy.
The person or persons who will receive the death benefit of your life insurance policy.
Typically when you have whole life insurance, a portion of your premiums go into an investment account, or the cash value. This money grows with interest over time. You can do many things with the cash value, including taking out a loan, using it for any needs that arise or funding the policy. The longer you’ve had the policy, the higher the cash value will be. Please remember that loans do accrue interest and any outstanding loan balance reduces the death benefit at the time of claim
If you cancel your whole life policy and take the cash value, the amount you may be able to walk away with is an amount known as the cash surrender value. This amount equals the cash value minus a surrender charge, any outstanding loans and interest on those loans.
Think of a contingent beneficiary as your backup — the person who will receive proceeds of a life insurance policy in the event your primary beneficiary is no longer alive.
The right to change (convert) a term life policy to a permanent one at the end of the term without having to take a medical exam. It’s beneficial because the policyholder can enjoy the benefits of permanent life insurance at an older age without evidence of insurability.
The period of time (with a start and end date) an insurance policy covers the policyholder.
The amount of money paid to the beneficiary of a life insurance policy when the insured dies.
A document with important details of an insurance policy like your policy number, coverage limits, deductibles, premium amounts, dates of the policy, and more.
An official statement that outlines the terms, conditions, risks and rules of a financial transaction, such as an insurance policy, loan or investment.
A partial refund of premiums paid on permanent life insurance. Similar to the dividends paid by a company to its shareholders, the amount paid to policyholders depends on the insurance company’s profits.
Not all life insurance policies pay out dividends. But for those that do, the policyholder is given different options on how to use them. The dividend can earn interest, reduce the premium, purchase additional paid-up insurance, or be taken in cash.
A change to your insurance policy that adjusts your coverage. Also known as a “rider” or “floater,” endorsements are designed to tailor insurance policies to better meet your needs by helping you decide how much insurance you really need.
End-of-life planning that is done in advance. An estate plan may include a will, identified beneficiary, and a power of attorney.
Part of the application process for a life or health insurance policy where an applicant provides health information, such as medical history. The EOI can determine whether you’re approved for coverage and how much your premiums will be.
An event or situation not covered by an insurance policy to avoid risks that may be too high or unpredictable. Exclusions help clarify the scope of coverage and define the limits of protection so you know exactly what you’re protected against.
The amount of money a life insurance policy will pay upon the insured’s death. The name comes from the fact that this amount is typically shown on the "face" or top sheet of the policy. Learn more about life insurance death benefits.
Final Expense Insurance is a funeral insurance policy meant to provide funds for the insured’s final expenses after death. Final Expense Insurance is life insurance sold through licensed insurance producers that do not usually have specific relationships with funeral homes. The policy funds are directed to the identified beneficiary and may be used to cover funeral expenses, debt, or other outstanding needs.
A certain amount of time (usually 30 days) to examine an insurance policy and return it to the company for a full refund if not satisfied.
The period of time a policy stays in force even after a premium payment is due and goes unpaid. Most grace periods are generally 30 days.
Life insurance that covers an entire group of people (as opposed to individual coverage). Employers usually offer group life insurance to their workers as part of a larger benefit package. Typically, the coverage ends when you leave the company.
The right to continue your insurance each year as long as premiums are paid. Even if you develop a serious health condition and have a lot of claims, you have the assurance that your insurance will stay put.
Sometimes, errors are made when applying for life insurance. That’s where an Incontestable Clause can protect you, the insured. It prevents the insurance company from cancelling coverage due to a misstatement on your application after a certain amount of time has passed, usually two or three years.
With regards to life insurance, someone having an insurable interest in you means that they would experience financial loss and hardship if you die. This is required when purchasing life insurance on another person.
The physical, legal document that an insurance company issues to the policyholder which outlines the terms of the insurance.
The person who is covered by an insurance policy.
The company that underwrites the insurance policy and pays out claims. It’s important to choose an insurer who is reliable and financially stable.
A life insurance policy beneficiary who cannot be removed from a policy unless they agree to be, and who also has the power to prevent the policy holder from canceling the policy without their approval.
Life insurance purchased by an adult that insures children, typically under the age of 15. This is often permanent life insurance that has a savings component and guarantees the child coverage as an adult.
Termination of coverage due to nonpayment of premiums within a specified time period. A lapsed policy no longer pays benefits or provides coverage.
The number of years someone is expected to live, based on statistical research. Insurers factor in life expectancy when determining the premium for certain policies, particularly life insurance.
Part of a life insurance policy that lets you access funds while you’re still living, usually to cover the cost of care if you were to have a terminal, chronic, or critical illness.
Using dividends earned by a whole life insurance policy to purchase additional coverage and grow additional cash value.
A whole life policy that is paid in full, remains in force, and you no longer have to pay any premiums. It’s a great option for someone who has recently received an inheritance or has come into money.
A written contract between you and the insurance company stating the terms of insurance.
Let’s say you own a whole life insurance policy and need emergency cash. One option is to get a policy loan, which accesses the cash value of your life insurance. You’re not actually withdrawing the cash value, it’s simply being used as collateral on the loan. Keep in mind that loans accrue interest and if the money isn't paid back, the money is withdrawn from the policy’s death benefit.
The amount of money you pay for an insurance policy. Depending on the policy, premiums can be paid monthly, quarterly, semi-annually or annually.
Restoring a policy that had previously lapsed due to unpaid premiums. This is usually allowed during the 31 days following the expiration of an insurance policy's grace period. Reinstatement requires payment of all overdue premiums plus interest, and may require evidence of insurability.
The act of terminating a policy with an insurance company and replacing it with a new policy. Policyholders sometimes replace their policy with a new one to get more or less coverage, to lower the premium payment, or to switch to a policy better suited to their needs. Replacement transactions are highly regulated to help protect consumers.
An optional add-on to an insurance policy that provides additional benefits for an increased cost.
The fee deducted from a life insurance policy or annuity payout when a policyholder cancels (or “surrenders”) the policy. Surrender charges typically decline over time, though some policies impose surrender fees for as long as 15 to 20 years after you buy a policy.
A life insurance policy that provides death benefit protection for a certain length of time, usually 10, 20 or 30 years. The policy pays a benefit to your beneficiaries should you pass away during the term. Once the term expires, you can either renew it for another term, convert the policy to permanent coverage, or allow the policy to end.
The person in an insurance company who reviews the application for insurance and decides if the applicant is acceptable and at what premium rate. For life insurance, the underwriter will look at a number of data points, including your lifestyle, occupation, medical record, financial history, and driving record.
The process by which an insurance company reviews your application and other information and decides whether to insure you and if so, how much you’ll pay for coverage. For life insurance, the underwriter looks at data like your age, health and medical history as well as lifestyle information like your hobbies and driving record.
A type of life insurance that can protect you for your entire life, while offering the flexibility to change your premium or benefit amount as life takes twists and turns.Universal life insurance also allows you to build cash value over time that you can use for unexpected expenses that come up.
A rider or supplemental benefit that helps prevent your life insurance from lapsing if you become incapable of making payments. If you become too sick or injured to work, this rider goes into effect and covers your policy premiums. Qualifying scenarios would include things like severe injury, permanent illness or some other catastrophic life change that results in you becoming disabled.
A type of life insurance that provides a set amount of coverage for your entire life. You pay the same premium amount for the life of the policy, so you always know what to expect. In addition to providing a death benefit, whole life policies build cash value over time – money you can use if the need arises.
Think of it as a way of trading in your life insurance policy or annuity for a new one without any tax penalties. The exchange must meet the requirements of Section 1035 of the Internal Revenue Code for the transaction to be tax-free.
The period of time in which Lifetime Income Withdrawals will be based on a higher payout rate. The Lifetime Income Withdrawals will drop to a lower amount after the Accelerated Income Period has elapsed.
Your contract value including any interest earned, additional premium (if applicable), minus any withdrawals taken.
An accumulation period is the time between the first premium payment and when the payout begins. During this time, the premiums paid into the contract "accumulate" with interest.
Used in the calculation of the Index Earning Factor and Balance Allocation Factor; the Annual Fee could be 0%.
The annuitant's lifetime is used to measure the life of an annuity. The owner of the annuity controls the payments and is often the same person as the annuitant.
Annuity premium is the payment one makes into an annuity contract.
The age the insured has reached since original policy issue is the attained age.
Value changes daily based off of changes in underlying indices. Value is not locked in until end of term.
This is the anticipated rate that's credited in the second year of an annuity contract. The base rate is not a guaranteed rate, and it may differ from the actual interest that is credited at the time the contract reaches its second year.
A basis point is a unit of measurement used when discussing interest rates; one hundred basis points equals 1%.
The person, persons or organization designated to receive the death benefit of an annuity. A primary beneficiary is your first choice to receive proceeds from the policy. Contingent beneficiaries receive proceeds in case the primary beneficiary(ies) dies.
For an indexed annuity contract, the cap is an upper limit on the amount of an index's gain in value that will be credited to the annuity value.
Cash value if you were to surrender the contract. This can fluctuate if a Market Value Adjustment is applicable to your contract.
The sum of money in an annuity that is, with some limitations, available to the contract holder in the form of withdrawals, loans, collateral or upon surrendering the policy. Also known as the Cash Surrender Value or CSV.
A claim is the right of an individual or corporation to recover a loss under the terms of an insurance policy.
Compounding interest is the type of interest that is earned on both the original principal amount and on the interest accumulated from earlier periods.
The Daily Value of the contract at any time is equal to the sum of the Strategy Daily Values.
The sum of money paid to the beneficiary of an annuity.
A deferred annuity is an annuity contract where periodic payments do not begin until some future date elected by the annuity owner.
A rollover is a direct transfer of retirement funds from one qualified plan to another plan. Because funds do not pass through the hands of the owner they do not incur any tax liability for the owner. Also known as a direct transfer.
There are many circumstances that require that a policy be changed; e.g., change of name, change in coverage. An endorsement is a form that is attached to the policy to record the change.
The percentage of each annuity payment that is excluded from taxes. IRS guidelines for life expectancies are used by the insurance company to calculate this ratio.
Under the terms of a fixed annuity, the insurance company agrees to credit a guaranteed minimum interest rate to the annuity. There is no market risk to your premium.
These annuities offer the same type of minimum interest rate guaranteed by a traditional fixed annuity, but have the potential to credit additional interest based in part on the performance of a market index.
The amount you may withdraw from your annuity that is not subject to withdrawal charges.
The number of years payments are guaranteed to be made, regardless of whether the annuitant is living.
An annuity that begins to provide you with an income right after paying a single premium. Also known as a SPIA.
Bonus percentage applied to the initial Income Base at issue.
The strategy index percent change is limited to a maximum value called the cap rate. For example: If the strategy index percent change is 10% and the cap rate is 8%, interest credits would be calculated using a rate of 8%.
An interest crediting strategy where the credited interest rate is calculated based partly on the upward movement of a major stock market index.
Amount of Premium received at issue.
(Fixed and Guaranteed) One year strategies have a fixed rate of return that is set at term and is not affected by an Index. It is a guaranteed rate for a guaranteed period, typically one contract year.
The interest-out-first rule works like this: If a withdrawal is taken from an annuity contract, the withdrawal must be treated as interest (and taxed accordingly) if the cash value of the contract exceeds the amount paid into the contract at that time.
A policy that covers two or more lives and makes annuity payments to two or more annuitants is called a joint-life annuity. Sometimes payments cease at the first death and sometimes at the last death.
The entire payment of an annuity policy to the annuitant at one time, rather than in installment payments, is a lump sum payment.
Funds are designated as non-qualified if they have already been taxed (post-tax dollars), except Roth IRA funds.
For an indexed annuity the participation rate is the amount of an index's gain that will be credited to the policy value.
The method of annuity payments elected by the Owner. See below for definition of payment options.
Single Life - Payments continue for the annuitant’s lifetime and stop upon death.
Period Certain - Payments are guaranteed for a specific period, regardless if annuitant is living.
Single Life with Period Certain - Payments are guaranteed for the greater of the annuitant’s lifetime or a specified period.
Guaranteed Lump Sum - A one-time payment made on a specified date, regardless of whether the annuitant is living.
Paid If Living Lump Sum - A one-time payment made only if the annuitant is living on the scheduled payment date.
Single Life with Installment Refund - Payments continue for life. If the annuitant dies before receiving payments equal to the premium, the remaining amount is paid in installments to the beneficiary.
Single Life with Cash Refund - Payments continue for life. If the annuitant dies before recovering the full premium, the unpaid amount is paid as a lump sum to the beneficiary.
Temporary Life - Payments are made for a set number of years or until the annuitant dies—whichever comes first.
Joint Life and Last Survivor - Payments continue for the lives of two annuitants. After the primary annuitant dies, payments continue at a selected percentage (e.g., 100%, 75%) for the survivor’s lifetime.
Joint Life and Last Survivor with Period Certain - Payments are guaranteed for the greater of both annuitants’ lifetimes or a specified period. If both annuitants pass away before the period ends, payments continue to a beneficiary.
Joint Life and Last Survivor with Installment Refund - Payments continue for both annuitants’ lifetimes. If both die before recovering the premium, the unpaid balance is refunded through continued installments to the beneficiary.
The amount paid to the insurance company to purchase the annuity. Paid as a lump sum or as installments.
An insurance company may credit an additional amount to your initial premium in the form of a premium bonus. This bonus increases your Accumulation Value immediately. A premium bonus may have a vesting schedule or recapture schedule, which means that a surrender or withdrawal in excess of a free withdrawal amount may result in forfeiting all or portion of the premium bonus.
The total amount of premium paid to an annuity.
Annuity funds are designated as qualified if they have not yet been taxed (pre-tax dollars), except Roth IRA funds.
The IRS requires individuals owning IRAs to take a required minimum distribution (RMD) each year once you reach a certain age, which varies by birthdate. The annual deadline for taking an RMD is December 31. You may delay your first RMD until April 1 of the year after you attain the required beginning age. If you delay your first RMD, you'll have to take your first and second RMD in the same tax year. If you fail to take your RMD, you may be subject to an excise tax. Please consult with your tax professional for guidelines specific to your situation.
Rider is another name for an addition to a base policy contract that adds further benefits or agreements to an insurance policy.
A settlement option is a provision in an annuity policy that, when exercised, provides for optional methods of settlement in place of a lump-sum cash payment. These are usually in the form on a stream of periodic payments, made for a fixed amount of years or made during the lifetime of the annuitant.
An annuity purchased with one lump sum payment is referred to as a single premium annuity. The payout can be either immediate or deferred.
An annuity contract that is purchased with a single premium payment and that will begin making payments within one year after the contract's issue date.
The spread rate also known as asset expense charge or annual fee is the percentage rate subtracted from the Index Cap Rate or the Index percentage change, whichever is less. For example: If the cap rate was 10%, the index percent change was 8% and the spread was 3%, interest would be figured on 5% (8%-3%).
The process of determining whether a financial product is appropriate for a client based on their financial situation, goals, and risk tolerance. It ensures the product aligns with the client’s needs and complies with regulatory and company standards.
A surrender charge can mean an amount charged to an annuity contract owner when they prematurely withdraw a portion or the entire contract's accumulated value.
The surrender value is the amount in cash a contract owner is entitled to collect upon terminating the annuity contract prior to maturity or death.
Interest credited to an annuity that is not taxed as earned income until it is withdrawn.
A tax sheltered annuity (TSA) is an annuity issued by an insurance company under Section 403 (b) of the Internal Revenue Code designed to help the annuitant accumulate funds for retirement. Eligibility is limited to specific occupations such as teachers and people who work for non-profit organizations.
A variable annuity is a contract where the cash value of the policy fluctuates in response to the performance of the policy's underlying investments. There is generally a minimum guaranteed death benefit under variable annuities.
The amount deducted from your annuity value upon surrender, or for withdrawals exceeding any free withdrawal provision of your contract.
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