Retirement Annuity Terms

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The following terms cover annuities in general, and some specific annuities.

Study these common annuity terms to get a head start on your retirement learning.

Annuitant. One who receives payments from an annuity contract.
Annuity. A guaranteed yearly allowance paid by an insurance company or other entity in consideration of a lump sum payment (premium) for the contract. This yearly payment continues for a set number of years or until the annuitant’s death.
Annuity units. Shares of an annuity’s separate account used to calculate payment from variable annuities.
Fixed-dollar annuity. An annuity with guaranteed equal payments.
Individual retirement annuity. An individual retirement account in the form of an annuity. It has contribution and distribution regulations like traditional IRAs do.
Joint annuity. An annuity covering two or more people.
Premium. An amount of money paid to purchase an annuity contract. The amount varies according to the benefits purchased. The premium can be either a lump sum payment or a series of payments.
Retirement annuity. An annuity with funds intended for one’s retirement. The premium is calculated to provide a predicted future benefit.
Tax-sheltered annuity. An annuity with premiums (contributions) paid by pretax dollars from one’s earned income. Taxes on both contributions and earnings are thus "deferred" until distribution.
Variable annuity. An annuity with earnings and distributions that vary according to how well its investments perform.