ANNUITIES

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What is an annuity?

An annuity is a contract, issued by an insurance company, which allows you to accumulate money tax-deferred for long-term financial goals like retirement.  When you are ready to receive income from your annuity, you can withdraw funds as needed, or set up a regular payment schedule for a given time period, guaranteed by the issuer.  Please consider that withdrawals from annuities before age 59 1/2 may be subject to ordinary income tax and a 10 percent tax penalty.

Variable Annuities - Upside potential, downside income protection

Many retirees accumulated their retirement nest egg through equity investing, and they often want to continue with these investments during retirement.  Many times, however, they find that their tolerance for risk and market volatility is not what it used to be.  Market dips can have a severe impact, both in purchasing power and in investor confidence.  Even so-called conservative investments can be highly volatile, creating ups and downs instead of the steady growth that so many desire.

Variable annuities offer a potential solution to volatility through benefits designed to help you stay invested in equities while guaranteeing¹ a baseline level of income in retirement.  With these optional benefits, you are guaranteed a minimum income even when market values decreases, plus you enjoy the potential for a higher income if the value of the underlying investments increase.  These features may allow you to invest confidently, knowing that an up market offers benefits, while a down market won't erode your guaranteed minimum income².

Fixed Annuities - Guaranteed Interest Rate

A fixed annuity has a guaranteed² fixed interest rate for a stated period of time.  Depending on the terms of the contract, the insurance company may adjust the rate periodically.  There are generally two types of fixed annuities.  The first type is one in which the insurance company guarantees the interest rate for a specified period of time, typically five to six years, with a principal return feature in the event the investment is liquidated prior to the specified holding period.  At the end of the guarantee period, you may elect to continue, surrender the contract or receive income in a variety of ways.

The second type has a market value adjustment (MVA) feature which may result in a gain or loss in your contract if surrendered prior to the end of the rate guarantee period.  Be sure you understand which type of fixed annuity you are purchasing before investing.

To learn more about tax-deferred annuities, please take a look at our variable annuities brochure or our fixed annuities brochure.  If you feel that a variable annuity may be of interest to you or if you would like us to quote you our current fixed annuity rates, please contact us...we offer a wide variety of variable and fixed annuities and can assist you in evaluating the alternatives and selecting the annuity that is most appropriate for your needs.

¹ These guarantee features require additional fees, which pay for the insurance features purchased.  Guarantees apply to minimum income from an annuity; they do not guarantee an investment return or the safety of the underlying funds.  These features may not be appropriate for all investors.

² Guarantees are based on the claims-paying ability of the issuing insurance company.