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In its simplest form, a contract between you and an insurance company. In exchange for your contributions, the insurance company agrees to:

  • pay a stated interest rate.
  • guarantee* the return of your principal with interest.
  • can provide tax-deferred growth.
  • guarantee income for life, if you pick that payment option. At payout, you direct the life insurance company either to make monthly payments based on your contribution balance or give you a lump sum payment. 


The person on whose life annuity payments will be based, and who may also receive the payments.


To convert an account balance to a guaranteed income paid in installments. The annuity contract outlines the payment options available.


The person or entity you name to receive:

  • your account balance, if you die while your annuity is accumulating, or
  • any remaining annuity payments, if you die before your contract is fully paid out.


A credit to your contributions made in the first year of the annuity contract. This credit may not always be available.

Contribution payments

The deposits made to an annuity. Some annuities allow you to make a single contribution, and some allow you to contribute on a regular basis—or anytime you like.

Deferred fixed annuity

Long-term savings vehicle used mostly for retirement or as a safe holding place for accumulating money. Contributions are guaranteed by a minimum interest rate. The account also pays a current interest rate that  is not guaranteed. The current rate is periodically reset at the discretion of the company. You can select a payout plan that suits your situation at the time you are ready to receive payments.

Flexible premium deferred annuity (FPDA)

A type of deferred annuity that allows you to make periodic contributions. The FPDA has a longer surrender charge period than the Single Premium Deferred Annuity (SPDA).

Immediate annuity

With a single contribution (lump sum), you can establish an immediate steady stream of income for as long as you choose, including for life. You can specify lifetime payments for another person as well. You may also choose to provide income to a beneficiary upon your death.

Individual retirement annuity (IRA)

A retirement annuity into which anyone may contribute up to limits established by the IRS each year from employment income. If you reach age 50 by the end of a given year, you can contribute an additional amount to your IRA.

Note: annual dollar limits are the combined limit applied to all IRAs that you hold. Contributions may or may not be tax-deductible, based on your income and eligibility for other employer-based retirement programs. Higher contribution limits apply if your IRA is a “simplified employee pension” (“SEP”) IRA.

  • Traditional IRA Annuity. You make tax-deductible contributions and your contributions and earnings grow tax deferred. Your account earns a fixed interest rate, adjusted periodically based on market conditions. Your interest rate is never lower than the Guaranteed Minimum Interest Rate specified in your contract. Income restrictions  apply.
  • Roth IRA Annuity. You contribute after-tax dollars and your earnings grow tax-free. You may withdraw funds at any time without paying income tax or a penalty. Your account earns a fixed interest rate, adjusted periodically according to market conditions. Your interest rate is never lower than the Guaranteed Minimum Interest Rate specified in your contract. Income restrictions apply. 

Joint annuitant

The second person designated to receive all or a portion of the distribution payments. The joint annuitant receives payments in the payout phase only, after the primary annuitant dies.

Matured annuity

Most annuities have a specific maturity date when the contract ends. At that point, you must either begin taking payments or move your assets to another annuity, with a new maturity date.

Payout options (settlement 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 specified period. Guaranteed payment for a chosen number of years (5-30). The monthly amount you receive is based on the balance of your annuity and the number of years you select.
  • Single life income. Guarantees income for life, no matter how long you live. The amount of the payment depends on your account value and life expectancy. The payment amounts may be fixed or variable, depending on the annuity.
  • Joint life income. Guarantees income for the lives of two annuitants. After one of you dies, payments continue being made to the other if he or she is alive. Payments stop once both of you are no longer living. Payments after the first annuitant's death may be the same, or lower, depending on what you select when you purchase the annuity.
  • Single life Income with period certain. Guarantees payments for a specific time period (period certain) of 10 or 20 years. If the you die before all payments have been made, your beneficiary receives the balance of payments for the rest of the guaranteed period.
  • Income of specified amount. Guarantees payments of a certain amount every month for as long as the account balance and its interest proceeds provide.

Period certain

An annuity income option that guarantees payments for a specific time period. 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.

Principal Guarantee Option

In the calculation of your payout schedule, a payment option can be determined that offers you a guaranteed return of your principal during a specified period which you select.

Single premium deferred annuity (SPDA)

A type of annuity that does not allow additional payments beyond the first 60 days of the contract. The advantage of an SPDA is that the surrender period is shorter than an Flexible Premium Deferred Annuity (FPDA).

Surrender charges

Many annuity contracts have surrender charges on early withdrawals that exceed 10% of your balance. These charges are made only if you surrender or withdraw annuity funds occurs during the time period indicated in your contract.

Tax deferred

In a tax deferred investment such as an annuity, no taxes are due until you make withdrawals. You pay no current tax on investment gains.

Tax free

An investment in which the interest earned is not taxed upon withdrawal. A Roth IRA is a tax free investment.


Money that you withdraw from your annuity before it has matured. In a deferred annuity, you can generally make full or partial withdrawals, although early withdrawal charges, tax penalties (if made before age 59-½) and income taxes may apply. You may also pay tax penalty on earnings for withdrawals before age 59-½.


Annuities are offered by Church Life Insurance Corporation, 19 East 34th Street, New York, NY 10016.

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