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Annuities
Qualified Retirement Plans
Annuity
The following is a glossary of terms commonly used in the discussion of Annuities.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accrued benefits
Pension benefits that an employee earns based on his/her years of service at a company.
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Accumulation Period
The period between the issue date of the contract and the annuity commencement date. Back to top
Accumulation phase
The period when an annuity owner can add money and accumulate assets tax-deferred. Back to top
Accumulation Unit
A measure used to determine the value of a contract owner's interest under the contract before annuity payments begin. The contract may have variable accumulation units and fixed accumulation units. Back to top
Accumulation unit value (AUV)
An annuity’s sub-account price per share during the accumulation phase. It’s the net asset value after income and capital gains have been included and sub account management expenses have been subtracted. Back to top
Accumulation value
The value of all the accumulation units in the variable investment options and/or the fixed-rate option credited to a contract. Back to top
After-tax contributions
Contributions to a retirement plan, which are subject to federal income tax. Also called voluntary contributions. Back to top
Annual insurance fee
This covers mortality and expense risk charges and other administrative expenses. It also provides for a guaranteed death benefit and for lifetime guaranteed income payments. Back to top
Annual policy fee
This covers the costs of maintaining and administrating an account during the accumulation phase. It is often waived, however, when an account’s value reaches a certain level (which is stated in the contract). Back to top
Annual Sub-account fee
A fee deducted for fund operating costs, management fees, and other asset-based costs incurred by the fund. This charge is assessed at the sub-account level and is not deducted from policy values. Back to top
Annuitant
The person on whose life the annuity payments are based and on whose death, prior to the annuity commencement date, death benefits under the contract are paid. (This person may or may not be the owner.) For certain products, a contingent annuitant may be named as well as a primary annuitant. When a contingent annuitant is named, we pay the death benefit prior to the annuity commencement date to the survivor of the annuitants. Back to top
Annuitize
To begin to receive payments from an annuity. Back to top
Annuity
A contract sold by an insurance company designed to provide payments to the holder at specified intervals, usually after retirement. Fixed annuities guarantee a certain payment amount, while variable annuities do not, but do have the potential for greater returns. Both are relatively safe, low-yielding investments. All capital in the annuity grows tax-deferred. An early withdrawal penalty often applies. Back to top
Annuity commencement Date
The date on which annuity payments under the contact begin. Back to top
Annuity owner
The person or people who make decisions about an annuity’s investments. The owner or owners have the rights to make withdrawals, surrender or change the designated beneficiary or other terms of the contract. Back to top
Annuity Payments
Periodic payments, either variable or fixed in nature, made by GIAC to the contract owner at a monthly intervals after the annuity commencement date. Back to top
Annuity Unit
A measure used to determine the amount of any variable annuity payment. Back to top
Contract Anniversary Date
The annual anniversary measured from the issue date of the contract. Back to top
Contract owner
You (or your); the person (s) or entity designated as the owner in the contract. Back to top
Death benefit
The payment made to a beneficiary from an annuity or policy when the policyholder dies. Also called survivor benefit. Back to top
Deferred annuity
An annuity that delays income payments until the holder chooses to receive them. Back to top
Deferred payment annuity
An annuity for which payments are made to the annuitant only after a specified period of time has passed. Back to top
Funds
The open-end management investment companies, each corresponding to a variable investment option. The Funds are listed on the front cover of the prospectus. Back to top
Good order
Notice from any party authorized to initiate a transaction under this contract that is received in a format satisfactory to GIAC at its customer service office and contains all information required by GIAC to process that transaction. Back to top
Hybrid annuity
An annuity, which combines features of a fixed annuity, and a variable annuity. Also called combination annuity. Back to top
Immediate payment annuity
An annuity which is purchased with a single payment and which begins to pay out right away. Back to top
Joint life annuity
An annuity issued on two individuals under which payments continue in whole or in part until both individuals die. Also called joint and survivor annuity. Back to top
Life annuity
Annuity that continues to pay out as long as the annuitant is alive. Back to top
Options
The variable investment options of a variable contract, which have corresponding, diversified open-end management investment companies, or the fixed rate option available for allocation of net premium payments and accumulation units. Back to top
Qualifying annuity
An annuity, which is purchased under a qualified plan and therefore receives favorable tax treatment. Back to top
Single-life annuity
An annuity that provides income benefits for one person only. Back to top
Single-Premium Deferred Annuity (SPDA)
A tax-deferred investment plan in which an individual makes a single payment to a mutual fund or insurance company. Similar to an IRA, but having no annual contribution limit. Back to top
Surrender charge
A fee imposed for terminating an annuity contract prior to its maturity. Back to top
Variable annuity
A life insurance annuity contract which provides future payments to the holder (the annuitant), usually at retirement, the size of which depends on the performance of the portfolio's securities. Back to top
Valuation Period
The time period from the determination of one accumulation unit and annuity unit value to the next. Back to top
Variable Investment Options
The funds underlying the contract are the variable investment options-as distinguished from the fixed-rate option-available for allocations of net premium payments and accumulation values. Back to top
Qualified Retirement Plans
The following is a glossary of terms commonly used in the discussion of Qualified Retirement Plans.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accrued Benefit
For Defined Contribution Plans this is the participant’s account balance. For Defined Benefit Plans it is the current value of the participant’s expected benefit at retirement which is calculated according to plan formula and the years of service completed by the participant. Back to top
Adoption Agreement
A fill-in-the-blank plan document which contains different options for such things as plan design, employee eligibility, vesting and distributions. Back to top
Amendment
A change in the terms of the existing plan document. Back to top
Beneficiary
A person named to receive plan benefits upon the death of a participant. Back to top
Contribution
A payment made to a plan fund by the employer and/or employee. Back to top
Effective Date
The date on which the plan first begins operations. Back to top
Eligibility Requirements
The conditions (usually age and service) that an employee must satisfy in order to participant in and benefit under the plan. The day on which an employee first meets all eligibility requirements is called the “Satisfaction Date”. Back to top
Entry Date(s)
The specified date or dates on which an employee may begin participation in the plan. Eligible employees are required to enter a plan no later than 6 months following the “Satisfaction Date”. Back to top
Forfeitures
Portions of a plan benefit lost by a plan participant who terminates employment before becoming fully vested under the plan’s vesting schedule. Back to top
Highly Compensated Employee (HCE)
1) A more than 5% owner of the employer at any time during the current year or preceding year. (2) An employee who had compensation from the employer in excess of $105,000 for the preceding year (2008). ($100,000 if the preceding year is 2007.) For next year, the 2009 compensation will be $110,000. Back to top
Keogh Plan
A plan that covers self-employed individuals (sole proprietors, partners). Back to top
Key Employee
An employee who during the current year is: (1) A 5% owner of the employer; (2) A 1% owner with compensation greater than $150,000; (3) An officer with compensation in excess of $160,000. Back to top
Nondiscrimination Testing
Testing mandated by law to demonstrate that a plan does not discriminate in favor of Highly Compensated Employees. Back to top
Non-Highly Compensated Employee (NHCE)
Any employee who is not a “Highly Compensated Employee”. Back to top
Non-Key Employee
Any employee who is not a “Key Employee”. Back to top
Owner-Employee
A sole proprietor or a partner owning more than 10% of the partnership. Back to top
Plan Administrator
The individual or entity responsible for day-to-day activities and required plan reporting. Back to top
Plan Sponsor
The business that established the plan. Back to top
Prototype Plan Document
A model or form document featuring a fill-in-the-blank adoption agreement wherein the employer can select among various options for such things as plan design, eligibility requirements, vesting and distributions. Back to top
Statutory Exclusions
Classes of employees that need not be taken into account for purposes of “Nondiscrimination Testing”: (1) Those who have not satisfied age/service requirements; (2) Those who participate in a collectively bargained retirement plan; (3) Nonresident aliens. Back to top
Top Heavy
A plan in which more than 60% of the plan’s benefits are payable to “Key Employees”. Top Heavy Plans must provide minimum benefits and faster vesting for “Non-Key Employees”. Back to top
Trust
A legal entity established to hold and invest assets of the plan. Back to top
Trustee
The plan fiduciary that is responsible for the operation of the “Trust”. A plan fiduciary is a person who has discretionary control over the administration of an employee benefit plan or the management of plan assets and is subject to the fiduciary responsibility rules prescribed by Federal Law (ERISA). Back to top
Vested Benefit
The portion of a participant’s benefit that cannot be taken away even if he or she terminates employment. Vested Benefits are determined according to the plan’s “Vesting Schedule” Back to top
Vesting
The extent to which a participant is entitled to his or her “Accrued Benefit” upon termination of employment. Vesting is based upon length of service. Back to top
Vesting Schedule
The schedule that describes the rate at which a participant earns a vested benefit under the plan. Years of completed service are translated into vested percentages. Back to top
Year of Service
Under Federal law this is a 12-month period during which an employee works 1,000 hours or more. Back to top
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