Annuity
A contract, generally issued by insurance companies, that pays an income benefit at designated periods for the life of a person, for the lives of two or more persons, or for a specified period of time. A deferred annuity generally defers the income payment (the "annuity") until some point in the future. Often the income earned during the deferral period is income-tax deferred as well. There are two basic types of annuities:

Fixed Annuity
A type of annuity that provides payment of a specific sum of money at a fixed rate of return for a fixed period of time.

Variable Annuity
A type of annuity that allows for the investment of assets in various portfolios. The return on assets will fluctuate in value over time, reflecting the performance of the underlying investment portfolios chosen.

Asset Allocation
A strategy of spreading investment dollars among different classes of assets. Investors often choose this strategy in an attempt to minimize the impact of any single investment class on the total performance of their investment portfolio. Some examples of asset classes are stocks, bonds, cash equivalents, and real estate.

Asset Class
A broad group of securities or investments that have similar characteristics.

Back-End Load
A deferred sales charge that exists in some mutual funds which the investor pays when withdrawing money from the fund. It diminishes with length of ownership.

Balanced Fund
A type of fund that diversifies its portfolio holdings among asset classes, such as common stocks and bonds, in fixed percentages.

Beneficiary
The individual(s) or entity, (eg. relative, charity, business, trustee), designated by the owner of a life insurance or annuity policy, to whom the policy's proceeds are to be paid upon the insured's death or when an endowment matures.

Beneficiary of a Trust
Person(s) for whom a trust is created and to whom the benefits are payable. Trusts can be used to prevent the exhaustion of an estate by regulating the beneficiary's receipt of trust benefits.

401(K) Plans
Employer-sponsored qualified plans that let employees contribute pre-tax dollars out of their paychecks toward a retirement investment that grows tax-deferred. Employers may sometimes match employee contributions. It meets a series of federal government requirements and is therefore eligible for certain tax advantages.

Alternate Funding Plan
A plan which offers self and partially funded cases with the protection and administrative advantages of conventionally insured plans. The planholder assumes some or all of the insurance risk.