Glossary

A subaccount is an investment option within a variable annuity contract, structurally analogous to a mutual fund, in which contract owner premiums are invested and from which the contract's accumulation value derives, with investment risk borne by the contract owner rather than by the carrier. Why it matters The subaccount is the structural mechanism by which a variable annuity exposes the contract owner to investment risk. The contract's accumulation value reflects subaccount per

The suitability standard is a regulatory standard of care requiring that a recommended financial product be suitable for the customer based on the customer's investment profile, applied to broker-dealer transactions under FINRA Rule 2111 and to insurance product sales under state adoptions of the NAIC Suitability in Annuity Transactions Model Regulation. Why it matters The suitability standard was for decades the principal standard of care governing how annuities and other commiss

A surrender charge is a fee imposed by the carrier when a contract owner withdraws funds from a deferred annuity in excess of the contract's free withdrawal allowance during the surrender period, calculated as a percentage of the amount withdrawn under a schedule that typically declines toward zero over a defined number of years. Why it matters The surrender charge is the structural mechanism that converts a deferred annuity from a liquid asset into a constrained one during the ea