Page 139 - The Informed Fed--Hearn Wealth Management

Surrender value: When a policy owner surrenders his/her permanent
life insurance policy to the insurance company, he or she will receive the

surrender value of that policy in return. The surrender value is the cash
value of the policy plus any dividend accumulations, plus the cash value
of any paid-up additions minus any policy loans, interest, and applicable

surrender charges.

Systematic withdrawal: Systematic Withdrawal is a plan you establish
to receive income from a managed account, mutual fund, or variable
annuity on a regular basis over a period of years. Systematic withdrawals

are flexible, so you can change the amount if you wish. But you are not
guaranteed lifetime income.

Tax Credit: An income tax credit directly reduces the amount of income
tax paid by offsetting other income tax liabilities.

Tax Deduction: A reduction of total income before the amount of
income tax payable is calculated.

Tax Deferred: The term tax deferred refers to the deferral of income
taxes on interest earnings until the interest is withdrawn from the in-

vestment. Some vehicles or products that enjoy this special tax treatment
include permanent life insurance, annuities, and any investment held in

IRAs.

Tax-Sheltered Annuity (TSA): Tax-deferred annuity retirement plan
available to employees of public schools and colleges; and certain non-

profit hospitals, charitable, religious, scientific and educational
organizations.

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