Deferred Annuity - In a deferred annuity, you receive payments starting at some later date, usually at retirement. With a deferred annuity you can invest either a lump sum all at once, or make periodic payments, either fixed or variable. Those funds grow tax-deferred until you're ready to begin receiving payments. Deferred annuities make up a large majority of all annuity sales in the United States, and are the type of annuity that Annuity FYI generally recommends if you do not need immediate income from your annuity.
Endorsement - Amendment to the policy used to add or delete coverage. Also referred to as a "rider."
Evidence of Insurability - Medical and other information about a person applying for insurance that the life insurance company keeps confidential, but uses to decide what premiums to charge.
Exclusion - Certain causes and conditions, listed in the policy, which are not covered.
Expiration Date - The date on which the policy ends.
Face Amount - The amount to be paid to the beneficiary when the insured dies. It will be reduced by any unpaid policy loans and interest on those loans.

Fixed Annuity - Fixed annuities are invested primarily in government securities, and high-grade corporate bonds. They offer a guaranteed rate of return, typically over a period of one to ten years. There are two basic types of fixed annuities: the Guaranteed Return Annuities (GRA) is a fixed annuity that offers a guarantee that you can never receive less than 100% of your investment -- no penalties or fluctuations in the interest rate market can impact your principal should you surrender. The Market Value Adjustment annuity (MVA) works much like the GRA, but there is no guarantee of your principal if rates rise and you surrender your contract. MVAs work like a bond and often pay more than a GRA due to the increased short-term risk of rising rates.

Free Look - A required period, usually 10 days after a policy has been delivered to the policy owner, during which the policy can be returned for a refund of all amounts paid.
Grace Period - A period (usually 31 days) after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout the period.
Guaranteed Insurability - An option that permits the policy holder to buy additional stated amounts of life insurance at certain times in the future without having to provide new evidence of insurability.
Illustration - A document used in life insurance sales presentation showing yearly numbers indicating how a policy will work. Usually it assumes that amounts being paid today will continue in all future years.

Immediate Annuity - In an immediate annuity, the investor begins to receive payments immediately upon investing. This is for investors that need immediate income from their annuity.  When you purchase an immediate annuity you can choose between payments for a certain period of time (typically five to twenty years – "period certain"), payments for the rest of your life and/or your spouse's life, or any combination of the two. You can even choose between a fixed payment that doesn't vary or a variable payment that is based on market performance.

Insured - The person on whose life an insurance policy is issued.
Insurer - The insurance company.
Lapse - Discontinuation of insurance without cash values when required premiums are not paid.
Limit - Maximum amount a policy will pay either overall or under a particular coverage.
Loan Value - The amount which can be borrowed by the policy owner from the company using the value of the policy as collateral. Usually the interest rate payable on the loan varies based on an index defined in the policy
Mode of Premium Payment - The frequency of premium payments during the policy year. Premium payments can usually be made on annual, semiannual, quarterly or monthly modes.
Mortality Table - A statistical table showing the death rate (probability of death) at each age.
Non-Forfeiture Options - Provision in the policy which allow policy owner to chooses how the cash value of the policy will be used if the policy is surrendered.
Ownership - All rights, benefits, and privileges under a policy are controlled by the owner, who is usually the insured. Ownership may be transferred or assigned to someone else by written request of the current owner.
Paid-Up Insurance - Policy on which it is guaranteed that no further premium need be paid.
Participating Insurance - Insurance on which the policy owner is entitled to share in the surplus earnings of the company through dividends which reflect the difference between the premium charged and the actual earnings and costs of providing coverage.
Policy - The printed document issued to the policy owner by the company stating the terms of the insurance contract.
Policy Year - A one-year period starting on the day and month the policy was issued. The first policy year starts on the date of issue, and ends on the day before the policy's first anniversary.
Premium - The payment, or one of the regular periodic payments, a policy owner is required to make for an insurance policy to keep it in effect.
Premium Financing - A a policyholder contracts with a lender to pay the insurance premium on his/her behalf. The policyholder agrees to repay the lender for the cost of the premium, plus interest and fees.
Pro-rata Cancellation - When the policy is terminated midterm by the insurance company, the earned premium is calculated only for the period coverage was provided.
Quote - An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.
Rated Policy - A policy issued with an additional premium to cover the extra risk involved if an insurer has impaired health or a hazardous occupation or hobbies.
Reinstatement - The restoring a lapsed or surrendered policy to full force and effect. The company requires evidence of insurability, and payment of all amounts necessary, including interest, to put the policy into the condition it would have been in had the lapse or surrender not occurred.
Rider - A provision added to a policy that provides additional benefits.
Settlement Option - One of the several ways, other than immediate payment in a lump sum, that the insured or beneficiary may choose to have the policy proceeds paid.
Standard Risk - The classification of an applicant for a life insurance who fulfills the physical, occupational and other requirements on which most of a company's policies are issued. Someone whose characteristics are more favorable may be classified as a "Preferred Risk". When the characteristics are less favorable, the applicant may be characterized as "Rated", or refused coverage altogether.
Suicide Clause - A policy provision which reduces the amount to be paid if the insured dies of suicide within the first two policy years.
Surrender - To terminate or cancel a policy for its cash value or other nonforfeiture options before the maturity date.
Underwriting - The process of evaluating applicants for insurance and classifying them fairly so the appropriate premium rates may be charged. This may involve a physical examination of the applicant.

Variable Annuity - It is a contract between you (the annuity owner) and a life insurance company. In return for your payment, the insurance company agrees to provide either a regular stream of income or a lump sum payout at some future time (generally, once you retire or pass age 59 1/2). Your premiums are invested in one or more securities portfolios and fixed interest accounts, where they earn interest and/or capital appreciation. No taxes are due until these earnings are paid out. (If you make a withdrawal before age 59 1/2, you could incur a 10% tax penalty.)

Waiting Period - A period of time set forth in a policy which must pass before some or all coverages begin.
Waiver of Premium - A rider added to policy that will pay the premiums during the total disability of the insured.