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Bonus Annuity
An annuity that usually offers a higher first-year interest rate that is guaranteed for one year. The "base rate" is the interest rate that the company projects it will pay in the second year and thereafter, but is NOT guaranteed in most cases. The difference between the actual rate in the first year and the projected base rate is the bonus rate. Quite often the "renewal rate" that the company declares on each contract anniversary from the second year and beyond is different than the projected base rate.

Last Updated: 9/23/2012 10:05:00 PM