Glossary

Insurance and retirement terms, in plain English

The words you'll see on Medicare, life insurance and annuity paperwork, explained simply. In our articles, terms with a dotted underline show these definitions when you tap or hover.

Medicare

Annual Enrollment Period: October 15 to December 7 each year. You can join, switch or drop a Medicare Advantage or Part D plan, and changes start January 1.
Benefit period: How Part A measures hospital and skilled nursing care. It starts when you're admitted as an inpatient and ends after 60 days in a row without that care. The Part A deductible applies to each benefit period.
Coinsurance: Your share of the cost as a percentage. For most Part B services you pay 20% of the Medicare-approved amount after the deductible.
Copayment (copay): A set dollar amount you pay for a service, such as a doctor visit or a prescription.
Creditable drug coverage: Drug coverage, often from an employer, that's expected to pay at least as much as standard Part D. Having it lets you delay Part D without a penalty.
Custodial care: Help with everyday activities such as bathing, dressing and eating. Medicare generally doesn't pay for it when it's the only care you need.
Deductible: What you pay for covered care before your insurance starts to pay. In 2026 the Part B deductible is $283 a year and the Part A deductible is $1,736 per benefit period.
Formulary: A plan's list of covered prescription drugs. Each drug is placed in a tier that sets what you pay.
HMO: Health Maintenance Organization. A plan type that generally covers care only from in-network providers, except emergencies, and may require referrals to see specialists.
Initial Enrollment Period: Your first chance to sign up for Medicare: a 7-month window that starts 3 months before the month you turn 65 and ends 3 months after it.
IRMAA: Income-Related Monthly Adjustment Amount. An extra charge on Part B and Part D premiums for people with higher incomes, based on the tax return from two years earlier.
Late enrollment penalty: An extra amount added to your Part B or Part D premium if you sign up late without other qualifying coverage. It usually lasts as long as you have that coverage.
Medicare Advantage (Part C): Private plans approved by Medicare that replace Original Medicare for your Part A and B coverage. Most include drug coverage and use a provider network, and each has a yearly out-of-pocket maximum.
Medicare Part A: Hospital insurance. It helps pay for inpatient hospital stays, short-term skilled nursing care after a qualifying hospital stay, hospice and some home health care. Most people pay no premium for it.
Medicare Part B: Medical insurance. It helps pay for doctor visits, outpatient care, lab tests and medical equipment. The standard premium in 2026 is $202.90 a month.
Medicare Part D: Prescription drug coverage from private plans approved by Medicare. In 2026, what you pay out of pocket for covered drugs is capped at $2,100 for the year.
Medicare Supplement (Medigap): Private insurance that helps pay costs Original Medicare leaves to you, such as deductibles, copays and coinsurance. It works only with Original Medicare, not with Medicare Advantage.
Medigap Open Enrollment Period: A 6-month window that starts the first month you're 65 or older and enrolled in Part B. During it, insurers can't turn you down or charge more because of your health.
Original Medicare: Medicare Part A (hospital) and Part B (medical), run by the federal government. You can use any doctor or hospital in the U.S. that accepts Medicare.
Out-of-pocket maximum: The most you'd pay in a year for covered services in a Medicare Advantage plan. Original Medicare on its own has no yearly limit.
PPO: Preferred Provider Organization. A plan type with a network you pay less to use, plus coverage out of network at a higher cost.
Premium: The amount you pay, usually each month, to keep your coverage.
Provider network: The doctors, hospitals and pharmacies that contract with a plan. HMO plans generally require you to use the network except in emergencies. PPO plans let you go outside it for a higher cost.
SHIP: State Health Insurance Assistance Program. Every state has one, and it offers free, unbiased Medicare counseling.
Skilled nursing facility care: Short-term nursing or rehab care after a qualifying hospital stay. Part A helps pay for it for a limited time. It's different from long-term custodial care.
Special Enrollment Period: A chance to sign up for or change Medicare coverage outside the usual windows after certain life events, such as losing employer coverage or moving.

Life insurance

Beneficiary: The person, people or organization you name to receive the death benefit. A contingent beneficiary is the backup if the primary beneficiary has died.
Cash value: The savings part of a permanent life policy. It grows tax-deferred, and you can borrow against it or withdraw from it, which lowers the death benefit if not repaid.
Contestability period: Usually the first two years of a policy. During it, the insurer can review the application and may deny a claim if important information was left out or misstated.
Death benefit: The amount the policy pays to your beneficiaries when you pass away.
Final expense insurance: A smaller whole life policy meant to cover funeral costs and other end-of-life bills, often with simplified or guaranteed issue.
Guaranteed issue: Coverage with no health questions. Amounts are usually smaller, and many policies have a waiting period, often 2 to 3 years, before the full benefit is paid for a death from natural causes.
Rider: An optional add-on to a policy, such as a waiver of premium or an accelerated death benefit. Some riders cost extra.
Simplified issue: Coverage you apply for by answering health questions, with no medical exam.
Term life insurance: Coverage for a set number of years, such as 10, 20 or 30. It pays a death benefit if you pass away during that time and usually has no cash value.
Underwriting: How an insurer reviews your health, history and other details to decide whether to offer coverage and at what price.
Universal life insurance: Permanent coverage with flexible premiums and an adjustable death benefit. How its cash value grows depends on the policy's interest crediting.
Whole life insurance: Permanent coverage that lasts your whole life as long as premiums are paid. Premiums stay level and the policy builds cash value at a guaranteed rate.

Retirement and annuities

Annuity: A contract with an insurance company. You pay a lump sum or a series of payments, and in return the money can grow tax-deferred and can be turned into income, including income for life.
Cap rate: The most interest an indexed annuity can credit for a period, even if the index gains more.
Deferred annuity: An annuity that grows for a period of years before you start taking income.
Fixed annuity: An annuity that credits a guaranteed interest rate for a set period. A MYGA (multi-year guaranteed annuity) locks the rate for several years.
Fixed indexed annuity: An annuity whose interest is linked to a market index, limited by a cap or participation rate. Your money isn't invested in the market, so index losses don't reduce it, though rider fees can.
Full retirement age: The age you can get your full Social Security benefit. It's 67 for people born in 1960 or later.
Immediate annuity: An annuity that turns a lump sum into regular income starting within about a year, often for life.
Income rider: An optional annuity add-on, usually for a yearly fee, that guarantees you can take a set amount of income for life.
Participation rate: The share of an index's gain used to figure the interest an indexed annuity credits.
Required minimum distribution (RMD): The minimum you must withdraw each year from most tax-deferred retirement accounts once you reach the required age: 73, or 75 if you were born in 1960 or later.
Rollover: Moving money from one retirement account, such as a 401(k), to another, such as an IRA or annuity. Done correctly, it isn't taxed when it moves.
Sequence of returns risk: The risk that market losses early in retirement, while you're withdrawing money, drain savings faster than the same losses would later.
Surrender charge: A fee for taking out more than the allowed amount during an annuity's first years (the surrender period). It usually shrinks each year until it reaches zero.
Tax-deferred: Taxes on growth are postponed until you withdraw the money, instead of being paid each year.

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