After Tax Savings: Term used to describe investments or contracts purchased with money that has already been taxed. Also known as "non-qualified" investments or contracts.
Annuitant: The person(s) on whose life the income payments are based. The contract owner decides who the annuitant(s) will be. The contract owner and annuitant are often the same person.
Annuitize: To convert the account value under a deferred annuity contract into a stream of income, either for one or more lifetimes or a specific period of time for you or you and another person.
Annuity: A tax-deferred contract issued by an insurance company that can provide an income for a specified time period, such as a number of years or for life. There are two types of annuities: deferred annuities, which allow you to grow your assets tax deferred and convert your account value to income payments at a later date, and immediate annuities, which generally allow you to receive income payments right away (but no later than 12 months after issue).
Asset Allocation: A financial strategy for investing money into various asset classes — such as stocks, bonds and cash — based upon your financial goals, risk tolerance and time horizon. Asset allocation has two main advantages: it can help increase investment returns and reduce risk.
Beneficiary: Generally, the person(s) who receive(s) money upon the death of the annuity's contract owner or annuitant. The contract owner decides who the beneficiary will be.
Contract Owner: The person(s) or entity who purchases the annuity and has all rights to the contract. This person can do things such as make withdrawals, name the annuitant (usually the contract owner) and the beneficiary, and in a variable annuity such as the American Forerunner Series, make investment decisions and transfer money among funding options.
Death Benefit: The guarantee that if you should die before you convert your variable annuity into regular income payments (annuitize your contract), your annuity's beneficiaries will receive the higher of the account value or a different amount specified in the deferred annuity (such as the amount you contributed to the annuity, less withdrawals). A variable annuity may offer additional guarantees that help protect the death benefit against market downturns.
Deferred Annuity: A type of personal retirement account that provides tax-deferred savings for long-term goals, such as retirement. When you are ready to receive income payments, the deferred annuity provides many choices, including guaranteed income for life. There are two types of deferred annuities: fixed and variable.
Deferred Income Annuity: A type of deferred annuity that offers limited flexibility during the deferral or savings phase (e.g., limited or no availability of withdrawals) in return for guaranteed payments during the income phase. Sometimes called “longevity insurance.”
Diversification: A financial strategy to help reduce risk by spreading your assets across different asset classes, such as stocks and bonds, or across different types of securities within the same asset class. For example, you can diversify your stock holdings into stocks of different industries.
Fixed Deferred Annuity: A tax-deferred annuity that guarantees you will earn stated or declared rates of return during the savings phase. When you convert this money into income payments, you will receive a fixed amount of income on a regular schedule. You may also generally be able to receive a lump sum at retirement in lieu of income payments.
Flexible Premium Annuity: A deferred annuity that accepts multiple purchase payments, which can usually be made at any time (as opposed to single premium).
Free Look Period: Period of time after an annuity contract is delivered (usually between 10 and 30 days) when the owner may cancel the contract and receive either their initial payment or the current value of the annuity contract. State rules vary.
Immediate Annuity: An annuity contract that you generally buy with a lump sum and from which you begin receiving income within a short period, always within 12 months. An immediate annuity can be either fixed or variable. Payments must be no less frequent than annual. Often called an “income annuity.”
Income Options: The various ways to receive income payments that an annuity contract offers. Many annuities offer a variety of options you can choose from, including guaranteed income for life.
Income for a Guaranteed Time Period Annuity: An annuity income option that guarantees payments for a specific time period, usually from 5 to 30 years.* If the annuitant dies before all payments have been made, then the owner (or beneficiary if the owner is deceased) will receive the balance of payments for the rest of the guaranteed period. You may be able to choose fixed or variable payments, depending on the annuity. Sometimes called a Period Certain.
Income for Life Annuity: An annuity income option that guarantees income for the life of the annuitant, no matter how long he/she lives. The amount of the payment depends on your account value and the life expectancy of the annuitant. The payment amounts may be fixed or variable, depending on the annuity.
Income for Life with a Guaranteed Time Period Annuity: An annuity income option that guarantees payments for the annuitant's life, with a guaranteed number of years.* If the annuitant dies during the guaranteed period, payments will continue to the annuity's owner (or beneficiary if the owner is deceased), for the remainder of the period. Many annuities also offer this option for the lives of two annuitants. You may be able to choose fixed or variable payments, depending on the annuity. Sometimes called Life With Period Certain, or Life With [X] Years Period Certain.
Income For Two Lives Annuity: An annuity income option that guarantees income for the lives of two annuitants. After one annuitant dies, payments continue if the other annuitant is alive. Payments stop once both annuitants are no longer alive. Payments after the first annuitant's death may be the same, or lower, depending on what was selected at the time of purchase. You may be able to choose fixed or variable payments, depending on the annuity. Sometimes called Joint and Survivor.
Individual Retirement Account/Annuity (IRA): An IRA is a type of account to which individuals with earned income (and their non-working spouses) can make tax-deductible contributions up to a specified maximum amount. Growth within the account is tax-deferred; however, withdrawals are generally taxed as ordinary income. A 10% federal tax penalty generally applies to withdrawals prior to age 59½. Withdrawals must begin by the April 1st following attaining age 70½. Eligibility to contribute and deduct contributions from taxable income is subject to rules based on such things as earned income, age and participation in employer-sponsored retirement plans. Often called a “Traditional IRA.” (Also see Roth IRA.)
Non-Qualified Annuity: A tax-deferred annuity generally purchased by individuals with after-tax dollars, rather than as part of a tax qualified retirement plan such as an IRA.
Prospectus: The legal document that provides detailed information about your variable annuity contract. It must be given to every person who is offered to buy a variable annuity contract.
Purchase Payments: The contribution(s) made to an annuity. Some annuities allow you to make a single contribution, and some allow you to make multiple contributions on a regular basis, or anytime you like.
Qualified Annuity: An annuity contract you generally buy with pre-tax dollars as part of a tax-qualified retirement plan.
Renewal Rate: The new, declared interest rate for money that has completed the initial guaranteed interest rate period. In a fixed deferred annuity, for example, the interest rate on your contract may be renewed periodically, usually every year, to reflect current market conditions.
Roth IRA: A Roth IRA is a type of IRA where your contributions are non-tax-deductible but withdrawals are tax-free after age 59½ (assuming certain conditions are met). Like a Traditional IRA (see “Individual Retirement Account/Annuity”), your eligibility to contribute and contribution limits are based on earned income and age. Unlike a Traditional IRA, no withdrawals are required at age 70½.
Surrender Charge: (Also See Withdrawal Charge) In a tax-deferred investment such as an annuity or a Traditional IRA, no current tax is payable on gains within the investment; no taxes are due until you make withdrawals. This is different from Tax-Free, where withdrawals are not taxable, as with a Roth IRA.
Tax-Deferred: In a tax-deferred investment such as an annuity or a Traditional IRA, no current tax is payable on gains within the investment; no taxes are due until you make withdrawals. This is different from Tax-Free, where withdrawals are not taxable, as with a Roth IRA.
Tax-Free Transfers: The ability to move money between the investment choices and fixed account within a variable annuity without incurring current taxes. In most annuities, these transfers are free of charge. However, additional restrictions may apply.
Tax-Sheltered Annuity: A tax-deferred annuity available only to employees of schools, nonprofit hospitals and certain other tax-exempt organizations in which your contributions are made through payroll reduction on a pre-tax basis (up to certain limits). All earnings grow tax deferred until such time as you make any withdrawals. Often called a 403(b) annuity.
Variable Annuity: A type of annuity in which the account value may fluctuate based on the value of underlying investments such as stocks and bonds. The contract owner has the ability to allocate money among several available investment choices. The contract owner, not the insurance company issuing the contract, assumes investment risks.
Variable Immediate Annuity: An income annuity that begins providing income payments right away, or soon after purchase. The amount of the payments is based on the performance of the investment choices that you select.
Withdrawal Charge: The charge imposed by an annuity issuer for early withdrawal. The withdrawal charge will be described in the annuity contract. Most annuities allow some withdrawals without this charge (10% of your balance each year is typical). Withdrawal charges also typically decline over time, eventually reaching zero.
Withdrawals: Money that you withdraw from your annuity. In a deferred annuity, you can generally make full or partial withdrawals, although a withdrawal charge may be imposed and ordinary income taxes accessed. A tax penalty on earnings for withdrawals before age 59½ may also be imposed.
*Duration of guarantee time period may be limited by tax law restrictions.
Pursuant to IRS Circular 230, New EnglandFinancial is providing you with the following notification: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance and annuity products. You should seek advice based on your particular circumstances from an independent tax advisor. New England Financial, its agents, and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. You should consult with and rely on your own independent legal and tax advisors regarding your particular set of facts and circumstances.
Like most annuity contracts, New England Life Insurance Company contracts contain withdrawal charges, limitations, holding periods, exclusions, termination provisions and terms for keeping them in force. Contact your representative for complete details.
New England Securities Corporation (member FINRA/SIPC), Boston, MA is the principal underwriter and distributor of the variable annuity contract issued by New England Life Insurance Company.
New England Financial is the service mark for New England Life Insurance Company, Boston, MA and related companies. Securities products are offered through registered representatives of New England Securities, a broker/dealer (member FINRA/SIPC), Boston, MA 02116.
| 
