How’s your financial literacy? Have you been studying up?

Sure, you may have various personal finance terms down. You even might have a few investing concepts under your belt, like asset allocation and diversification.

Still, there’s a lot of technical terms out there. Here’s a list of five of the toughest we bump into from time to time around here. Do you know them?

Modified Endowment Contract (MEC): This is what a life insurance policy becomes if the total amount of premiums paid into it exceeds a certain limit. It will then receive less-favorable tax treatment. (Related: Mind your MEC)

Market Value Adjustment (MVA): An MVA adjusts the amount of the withdrawal taken from an annuity, either up or down, based on the interest rate environment at the time. If interest rates are higher than when the contract was put in force, the requested withdrawal amount will be reduced. If current interest rates are lower, then the withdrawal amount will be adjusted up. (Understanding annuities)

Qualified Longevity Annuity Contract: This is a deferred annuity that is funded with proceeds from a retirement plan, like a 401(k) or IRA. It’s also satisfies the required minimum distribution rules, which otherwise require people to start taking payments from their retirement accounts after age 72. (QLAC basics)

Guaranteed Minimum Accumulation Benefit: This is typically a rider on a variable annuity that guarantees a minimum amount that will be received by the owner after a certain amount of time. (Understanding riders)

Substantially Equal Periodic Payments: This is a withdrawal strategy that lets individuals take a series level payments from a qualified retirement plan before they are 59 and a half years of age without incurring early withdrawal penalties. (Withdrawal strategies)

Learn more from MassMutual…

Life insurance terms you must know

Annuity terms you must know

Setting financial goals: Using the 5-10-15-20 concept

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