Death Benefit: The payment made to a beneficiary from an annuity policy when the policyholder dies. Also called a survivor benefit.

Debenture: A bond that is backed only by the general credit of the issuer.

Debt: The amount owed to creditors.

Debt securities: Securities that provide interest payments as compensation for the use of an investor's (i.e., lender's) funds. These payments usually last for a specific period. The principal (original loan amount) is usually paid at the end of this period. Some debt securities are backed by the credit of the issuer (i.e., Treasury bonds are backed by the credit of the U.S. government). However, other debt securities are backed by specific assets of the issuer. These securities are known as asset-backed bonds.

Declaration: Descriptive material in insurance policies relating to the subjects covered, persons injured, premiums charged, period of coverage, policy limits and warranties or promises made by the insured regarding the nature and control of various hazards.

Deductible: Amounts not covered by an insurance policy. The deductible is paid by the insured or by another insurance policy.

Deferred annuity: An annuity in which payments to the annuitant (or named beneficiary) are to begin either at a stated number of years in the future or when the annuitant reaches a certain age. During the accumulation period, the cash values of the annuity accumulate on a tax-deferred basis.

Deferred compensation: Arrangement through which the compensation to the employee for past or current services is postponed until some future date.

Defined-benefit plan: An employer sponsored retirement plan under which the benefit the employee is to receive in the future is based upon a predetermined formula. (Example: $10 per month income at retirement for each year employed.) The amount of the required annual employer contributions depends on the level of benefits to be provided and the estimated number of years in the accumulation period.

Defined-contribution plan: An employer sponsored plan under which the amount of the employee's retirement benefit is determined by contributions, not a predetermined formula. The amount of the employee's benefit equals the accumulated contributions plus earnings the fund will produce in terms of a retirement income or lump-sum payment.

Deposit Administration: A group annuity providing for the accumulation of contributions in an undivided fund out of which annuities are purchased for each covered person in the group for retirement purposes.

Deposit Administration Group Annuity: A group contract providing a deposit fund prior to retirement, with annuities bought from the fund at retirement.

Depreciation: A form of tax deduction that permits the recovery of the cost of an asset over its useful life in the form of tax savings. It is a bookkeeping entry and does not represent a cash outlay. The simplest method is straight-line depreciation, which allocates a constant amount each year during an asset's life. For example, an asset with a useful life of 10 years and no salvage value would generate an annual deduction of 10% of its cost. Accelerated depreciation is a method that permits deduction of a greater percentage of the cost of an asset in the early years of the asset's useful life with smaller deductions in later years. Examples of accelerated depreciation are the double-declining balance and the sum of the years-digits method. A recent method put into use is the Accelerated Cost Recovery System (ACRS), which applies accelerated methods of cost recovery over statutory periods.

Derivative security: A financial security whose value is determined, in part, from the value and characteristics of another security.

Disability insurance: Insurance designed to provide the insured person with specified payments for a specified period of time to replace income if the person is unable to work as a result of a covered illness or injury.

Distributions: Withdrawals from an employer-sponsored retirement plan or IRA typically made after the participant leaves the company. These may or may not be participant-initiated. Plan rules sometimes require full distribution of account balances below a specific minimum amount. Federal tax law requires distributions begin after a certain age or retirement.

Diversification: The combination in a portfolio of assets that have dissimilar behavior.

Dividends (investments): The portion of a corporation's earnings that it distributes among its stockholders, in proportion to the number and kind of shares they own. The decision to pay dividends is typically made by the board of directors, and they usually are paid quarterly, in the form of cash, stock, or rarely, some other property. Preferred stock dividends usually are fixed over a period of time, whereas common stock dividends are more dependent on the company's earnings and current cash position.

Dollar-cost averaging: A system of buying a fixed-dollar amount of securities at regular intervals. For example, the investor buys more shares when the price is low and fewer shares when it rises. The average price per share is thus lower than it would have been had the investor periodically bought a fixed number of shares.

Double indemnity: A rider to a life insurance policy that provides the beneficiary with an amount equal to twice the face amount of the policy if the insured dies an accidental death.

Earnings: Something earned, especially wages. As a financial term, earnings also refer to the balance of revenue after deducting costs and expenses.

Earnings income: Interest or dividends that are credited or paid to an investor. See "Income."

Efficient portfolio: A portfolio that minimizes historical portfolio risk for a given potential return, or maximizes portfolio potential return for a given level of historical risk.

Employee stock ownership plan (ESOP): A plan for profit sharing by employees in the companies for which they work. A company introducing an ESOP subscribes cash for common stock (shares) of the company that are deposited with a trust for the benefit of all participating employees. The stock does not usually immediately become the property of the employees, but is vested with them gradually over a period of time.

Endorsement: Document used with insurance policies that modifies the policy by adding special provisions.

Equity: An owner's interest in property or business; the market value of the property or business, less all claims and liens on it.

Equity Indexed Annuity: A non-traditional fixed annuity. The specified rate of interest guarantees a fixed minimum rate of interest like traditional fixed annuities. At the same time, additional interest may be credited to policy values based upon positive changes, if any, in an established index such as the S&P 500. The amount of additional interest depends upon the particular design of the policy. They are sold by licensed insurance agents and regulated by state insurance departments.

Employer Contribution: Money an employer contributes to a participant’s retirement plan account.

Employer Matching Contribution: One type of contribution plan in which an employer contributes to a participant’s retirement plan account. However, the amount contributed by the company depends on how much the participant contributes, based on a predetermined formula.

ERISA:  Employee Retirement Income Security Act of 1974. The federal law that established legal guidelines for private pension plan administration and investment practices.

Estate: The assets and liabilities of an individual.

Estate planning: Planning for the orderly handling, disposition and administration of an estate when the owner dies. Estate planning includes writing a will, setting up trusts and minimizing estate taxes, perhaps by passing property to heirs before death or by setting up a testamentary trust.

Exclusion: Item or loss exposure not covered in a particular insurance policy. Exclusions reduce the broad coverage provided in the insurance policy.

Expense Guarantee: One of the guarantees of all annuities; that is, the guarantee that expenses, the cost of doing business, will not be increased or exceed a certain percentage of the annuity contributions.

Expected Life: Number of years a person is expected to live, given his/her current age. The expected life is usually obtained from a mortality table.

Federal Home Loan Mortgage Corporation (FHLMC): A publicly chartered agency that buys qualifying residential mortgages from lenders, packages them into new securities backed by those pooled mortgages, provides certain guarantees, and then resells the securities on the open market. The corporation's stock is owned by savings institutions across the U.S. and is held in trust by the Federal Home Loan Bank System. The corporation, nicknamed Freddie Mac, has created a secondary market, which provides more funds for mortgage lending and allows investors to buy high-yielding securities backed by federal guarantees.

Federal National Mortgage Association (FNMA): A publicly owned, government-sponsored corporation chartered in 1938 to purchase mortgages from lenders and resell them to investors. The agency, known by the nickname Fannie Mae, mostly packages mortgages backed by the Federal Housing Administration, but also sells some non-governmentally backed mortgages. Shares of FNMA itself, known as Fannie Maes, are traded on the New York Stock Exchange.

Fee simple form of ownership: The ownership of property where the owner is entitled to the entire property without conditions or limitations.

Financial risk: Risk related to the amount of debt used in financing a company.

Fixed annuity: An annuity that pays a set rate of interest.

Fixed-income investment: A security that pays a set rate of interest over the duration of the investment term (i.e., a bond).

Fixed Investment Option: A fund that has a guaranteed or a “fixed” rate of interest.

Flexible Premium Annuity: A deferred annuity contract that allows the owner to make continual payments. The amounts and times of these payments are often left completely up to the owner. Interest is paid from the date payments are received and the amount available to annuitize is dependent on when and how much is received.

Flexible Premium: A premium that can be varied as to the amount and time of payment at the option of the premium payor.

Five-Year Annualized Total Return: This percentage figure reflects a sub-account's total return (gain or loss) averaged over five years.

Front-load fund: An open- or closed-end investment company that charges a fee upon the purchase of its shares. This fee, called "the load," is deducted from the amount invested. Also called Class A shares.

Fund: A portfolio of stocks, bonds and/or cash equivalents. The portfolio manager buys and sells securities.

Funded pension plan: In this type of retirement plan, the employer puts aside enough money each year to cover the cost of currently promised pension benefits.

Futures contract: A contract providing for the delivery or receipt of financial assets at a specified date and price.