Annuities

An annuity may help you enjoy financial freedom

An annuity is essentially an agreement to receive a stream of fixed payments on an investment, either for a lifetime or for a specified period of time. Annuities are used by many Americans to help them achieve financial independence because they:

  • Reduce your current taxes
  • Provide steady income for as long as you live
  • Can offer additional protection to investor’s beneficiaries
  • Help money grow faster through tax deferral

Additionally, a variable annuity provides a wide investment selection, allowing owners to diversify their assets without a fund-transfer penalty or tax consequence. There are two types of annuities: deferred and immediate.

Deferred annuities

Fixed and variable annuities both fall under the category of a deferred annuity, which means you defer the payout phase of the policy until some time in the future in exchange for the annuity accumulating cash value. A deferred annuity is one way investors can set aside money for long-term goals and offer benefits such as investment choice, strategic investment tools, family protection, and retirement income choices. The two types of deferred annuities are:

  • Fixed annuity
    Guaranteed interest rates protect investors from market volatility.
  • Variable annuity
    A selection of investment choices enables the investor to create their own investment strategy. A variable annuity is a long-term financial retirement vehicle that is subject to market fluctuations and may lose value.

Investors should consider the investment objectives, risks, charges, and expenses of a variable insurance product carefully before investing. Please carefully read the prospectuses for the relevant variable insurance product and its underlying investment options, which contain this and other information about the product. You can obtain a prospectus from your Financial Professional

Benefits of a deferred annuity

The primary benefits of a deferred annuity are:

  • Investment choice
  • Strategic investment tools
  • Family protection
  • Retirement income choices

Immediate annuities

Immediate annuities are purchased with a single premium, and immediately provide an income stream. In fact, an annuity is the only investment that is able to guarantee income for life, so you can pay yourself for as long as you live.

Each income check you receive from a non-qualified annuity will be made up of

  • Principal, which is non-taxable
  • Earnings, which are taxable

Because of this, annuity income from an immediate annuity is more tax efficient than with deferred annuities and other investments.

A variety of immediate annuities

Immediate annuities are available in a number of options:

  • Life Only
    Provides the highest income level but carries the most risk. While you are guaranteed to receive income payments for as long as you live, payments end in the event of your death.
  • Joint or Survivorship Life
    Fixed monthly income payments are made to two insured people under one policy, with payments continuing until the death of both. With some plans, the payment amount is decreased following the first death.
  • Life Income With Period Certain
    Guarantees income payments for as long as you live. If you should die before the end of the specified period, your beneficiary continues to receive payments until the end of that period.
  • Life With Installment Refund
    Guarantees income payments for as a long as you live. If you die before the initial principal has been returned to you, your beneficiary will continue to receive payments until the full principal has been returned.

Declare your financial freedom

Buying an annuity is a long-term commitment. Your Financial Advisor can help you determine how an annuity may fit into your financial portfolio.

All guarantees are based upon the claim-paying ability of the issuer.

Annuities are long-term investments designed for retirement purposes. Withdrawals of taxable amounts are subject to income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. Early withdrawals may be subject to withdrawal charges. An annuity is typically a tax-deferred investment. Holding an annuity in an IRA or other qualified account offers no additional tax benefit. Therefore, an annuity should be used to fund an IRA or qualified plan for annuity features other than tax deferral.



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