Page 148 - The Informed Fed--Hearn (edited 10.29.20)

Sub account: The investment portfolios offered in variable annuity
contracts are sometimes referred to as sub accounts. The term refers to
their position as accounts held within the separate account of the
insurance company offering the variable annuity.

Tiered interest crediting: A policy used by some companies who credit
different interest rates to a fixed annuity’s cash surrender value than they
do to it’s annuitization value. This means that the interest rate you earn
is based on whether you surrender the annuity for cash or annuitize the
contract for at least a minimum period and agree to the company’s rules
about how and when you can access your money. Typically, the rate is
significantly higher if you choose the annuitization option. When
comparing contracts, it’s important to know if the rate you’re being
quoted applies to the cash surrender value or the annuitized value.

Underlying investments: The stocks, bonds, cash equivalents or other
investments purchased by a variable annuity portfolio or mutual fund
with the money you and other people allocate to that portfolio or fund.

Unit Value: The dollar value of a single accumulation or annuity unit,
which changes constantly to reflect the current combined total value of
the underlying investments in your investment portfolios, minus
expenses.

Variable annuity: An annuity contract that allows you to allocate your
premium among a number of investment portfolios. Your contract
value, which can fluctuate in the short term, reflects the performance of
the underlying investments held in those portfolios, minus the contract
expenses.

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