Government National Mortgage Association (GNMA): A government-owned corporation, nicknamed Ginnie Mae, which is an agency of the U.S. Department of Housing and Urban Development. The GNMA purchases mortgages from private lenders, such as banks and savings and loans, packages them into securities called Ginnie Maes, and sells the certificates to investors. The agency guarantees the timely payment of principal and interest to the Ginnie Mae holders.

Government savings bond: A bond issued by the United States Treasury at a discount equal to the present value of a future interest payment. The amount paid at maturity is the face amount which, in this case, is principal and interest.

Government securities: Bonds and other debt instruments issued by federal agencies. Although government securities have high credit ratings, they are not backed by the full faith and credit of the federal government.

Grantor Retained Annuity Trust (GRAT): A trust in which the grantor substitutes retention of a right to payment of a fixed income in exchange for a fixed period of time.

Gross estate: Consists of all property owned directly by the decedent; property transferred during the decedent's lifetime, but with certain strings attached, annuities and life insurance benefits receivable by the beneficiary and jointly owned property over which the decedent had certain controls.

Group Annuity: A retirement plan designed for a group of persons (usually employees of a single employer) funded by a single annuity contract that is written on a group basis.

Growth fund: A fund with an investment objective of long-term capital growth and capital gains, rather than of current income.

Growth and income fund: An investment with this objective seeks a combination of current income (dividends and interest) and growth (capital appreciation).

Growth investments: Investments that allow for capital growth, but are not highly speculative, for example, mutual funds, managed equities and stocks, among others. Growth investments are riskier than conservative fixed-interest investments (certificates of deposit, government securities) but less risky than speculative investments, such as collectibles, penny stocks or commodities.

Growth stock: A stock that has shown better-than-average growth in market price appreciation and is expected to continue to do so through discoveries of additional resources, development of new products, or expanding markets.

Guarantee Period: Period during which the level of interest specified under a fixed annuity is guaranteed.

Guaranteed Death Benefit: Basic death benefits guaranteed under variable annuity contracts which are backed by the claims-paying ability of the issuer.

Guaranteed insurance option: Permits the policyholder to purchase up to a specified amount of additional life insurance regardless of his or her health.

Guaranteed Living Benefit: A guarantee in a variable annuity that a certain level of annuity payment will be maintained. Serves as a protection against investment risks. Several types exist.

Health Maintenance Organization (HMO): Organization that provides members with medical services, rather than reimbursements for healthcare costs. For a fixed fee, members are covered for all hospital bills, as well as surgical bills and other medical costs.

Hedge: An investment undertaken to offset the risk entailed by another investment.

Historical loss risk: The likelihood of experiencing a loss, a return less than zero measured in a probability.

Historical mean return: The statistical average return provided by an asset, asset category or portfolio mix over a specified time period. Also referred to as Average Annual Return.

Historical variation ranges: A statistical measure of the historical variation of asset class returns that shows the minimum and maximum returns at a given confidence level. This gives the investor a broad view of the historical characteristics of asset classes and provides a valid method for comparison of portfolio allocations.

Holding period: The length of time that an investor has owned a capital asset. The Tax Reform Act of 1984 shortened the capital gains holding period from a year and a day to six months and a day.

Immediate Annuity: A product purchased with a lump sum, usually at the time retirement begins or afterwards. Payments begin within about a year. Immediate annuities can be either fixed or variable.

Immediate Payment Annuity: An annuity that is purchased with a single payment and begins to pay out right away.

Income: Earnings, generally from interest or dividends, which are credited or paid to an investor.

Income bond: A type of bond on which interest is paid only when earned by the issuing entity.

Income/Income Dividend: Payment to mutual fund or variable account shareholders of interest or dividends generated by a fund’s investments. These are reinvested in the shareholders’ accounts.

Income fund: A fund whose investment objective is current income rather than capital growth. Income funds are often invested in bonds and other fixed-income securities.

Income investments: Interest-bearing corporate or government bonds. The issuer must pay the bondholder a specified sum of money on a specified maturity date and pay periodic interest until that time. Bondholders have no corporate ownership privileges.

Indemnity: Insurance compensation for loss or injury sustained.

Index: A tool that is used to measure the performance of the economy, a particular market or a group of investments (i.e., the S&P 500 Index).

Indexing: A method of investment in funds by which the portfolio manager seeks to emulate the performance of a broad-based index (i.e., the S&P 500 Index).

Individual Retirement Account or Annuity (IRA): A personal investment account that may be established by any individual who has earned income. Annual contributions to an IRA may be deductible from gross income in the calculation of federal and state income taxes (this is severely restricted by Tax Reform 1986 and state laws vary). Income taxes on the earnings are deferred until withdrawal or when annuity payments begin, usually at retirement, at which time the untaxed contributions and earnings are taxed as ordinary income. IRA funds withdrawn prior to age 59-1/2 may also be subject to a 10% federal tax penalty. IRA funds can be invested in stocks, bonds, funds, limited partnership units and annuities. Life insurance, collectibles (other than certain U.S. gold and silver coins) and any investments made on margin are prohibited.

Individual Retirement Account rollover: Provision of the federal law that enables persons receiving lump-sum payments from their company's pension, profit-sharing plan or other eligible retirement plan, because of retirement or other termination of employment to roll over the amount into an IRA within 60 days. Also, current IRAs may also be rolled over within the 60-day period. Through an IRA rollover, the capital continues to accumulate tax deferred until time of withdrawal.

Inflation: A condition in which the overall prices of goods and services continue to rise, usually caused by an undue expansion in paper money and credit relative to the supply of goods. In the U.S., the rate of inflation is measured by the Consumer Price Index.

Inflation hedge: An investment undertaken to offset the risk of inflation.

Inflation risk: The risk that inflation will erode the value of an investment. Investments with low historical earnings have more inflation risk than investments that generally have had higher earnings.

Initial public offering (IPO): The first sale of a corporation's stock to general investors.

In-Service Withdrawal: A participant-initiated withdrawal from an employer-sponsored retirement plan while the participant is still employed by the company.

Installment Refund Annuity: An annuity that promises to continue the periodic payments after the death of the annuitant, until the combined benefits paid to the annuitant and to the beneficiary have equaled the purchase price of the annuity.

Insurance: Insurance is a method of eliminating or reducing the financial burden of risk that involves serious financial consequences by dividing the losses they produce among many individuals.

Insuring agreement: An agreement that documents the broadly defined coverage in an insurance policy.

Interest on a loan: A payment made to a lender for the use of borrowed money.

Interest-bearing account: An account that pays interest on the money deposited.

Interest rate risk: The risk that the value of existing investments may be adversely affected due to the changes in the level of interest rates in the capital market.

Investment opportunity curve: The set of the most efficient portfolios for a given set of asset classes, with the asset classes constrained according to the investor's risk tolerance. insert

Investment company: A corporation or trust through which investors pool their money to obtain supervision and diversification of their investments (funds).

Investment income: Income earned from investment.

Investment/fund objectives: Objectives indicate the investment goals of the sub account of a particular variable annuity contract. Broad investment objectives include:

• Growth — seek capital appreciation, not current income, through investments in stocks and stock funds.

• Income — seek current income through investments in interest-bearing government or corporate bonds or bond funds.

• Stability — seek preservation of capital through investments in cash equivalents such as fixed annuities, Treasury bills and money-market fund options.

Morningstar's fund objectives include the following:

• Aggressive Growth — Sub accounts seek rapid growth of capital, often through investments in smaller companies and with investment techniques involving greater-than-average risk, such as short-selling, leveraging, and frequent trading.

• Growth — Sub accounts seek capital appreciation by investing in equity securities of companies with earnings that are expected to grow at an above-average rate. Current income, if considered at all, is a secondary objective.

• Growth & Income — Sub accounts seek capital appreciation and current income equally by investing in equity securities that have above-average yields and some potential for appreciation.

• International Stock — Sub accounts invest heavily in foreign equity securities; domestic stocks may or may not be held.

• Specialty Fund — Sub accounts seek capital appreciation by investing 65% of assets in equities of a single industry or sector, such as natural resources, utilities, real estate, or precious metals.

• Balanced — Sub accounts seek total return by investing in both stocks and bonds through either a fixed or a highly flexible strategy.

• High-Yield Bond — Sub accounts seek income by investing 80% or more of their assets in bonds rated below investment grade.

• Corporate Bond — Sub accounts invest primarily in corporate bonds of various quality ratings (and other fixed-income securities).

• Government Bond General — Sub accounts seek income by investing at least 65% of assets in U.S. government securities, including a blend of mortgage-backed securities, Treasuries, and agency securities.

• International Bond — Sub accounts seek current income by investing at least 65% of assets in bonds (not U.S. currency-denominated bonds), which are frequently obligations of foreign governments.

• Money Market — Sub accounts seek to achieve a reasonable amount of current income consistent with preservation of capital by investing exclusively in short-term vehicles.

Investment planning: Planning to achieve your investment objectives by managing your investment portfolio.

Investment portfolio: A collection of stocks, shares or other securities held by an investor.

Investment risk: The risk that your invested capital may be lost or reduced.

Irrevocable Life Insurance Trust: Trusts used to keep life insurance proceeds of the estate of the deceased who was insured.