ANNUITIES

People are living longer and that means more time and savings will be spent in retirement. If you need a tax-deferred investment to provide a guaranteed1 stream of income for life or a specified number of years, it might be worth considering an annuity. An annuity is a contract between an insurance company and an annuity owner. In exchange for a purchase payment, or series of payments, the insurance company guarantees1 to pay a stream of income in the future.

There are two types of annuities—Immediate and Deferred.

 

Immediate Annuities

 

An immediate annuity is usually purchased with a single premium and begins a stream of income within the first 12 months from the date of issue. You decide when payments will begin within that period and how long to receive income. There are two types of immediate annuities: fixed and variable.

  • Immediate Fixed Annuity
    An immediate fixed annuity provides a guaranteed and predictable stream of income during the payout period.
  • Immediate Fixed and Variable Annuity
    An immediate fixed and variable annuity provides a guaranteed stream of income. The variable income payments fluctuate based on the performance of the variable investment choices selected. A fixed account is also usually offered as an investment choice within this type of contract.

 

Deferred Annuities

 

A deferred annuity is specifically designed to help accumulate assets for retirement. It also offers the ability to turn those assets into a guaranteed stream of income at some point in the future. You decide when payments begin and how long to receive income. There are basically two types of deferred annuities: fixed and variable.

  • Deferred Fixed Annuity
    A deferred fixed annuity earns interest during the contract’s accumulation period. The interest rates are set by the issuing company and are guaranteed not to be lower than the minimum guaranteed interest rate shown in the contract. A contract’s accumulated assets can be converted into a guaranteed stream of income for the future.
  • Deferred Variable Annuity
    A deferred variable annuity offers variable investment choices (and usually a fixed account) in which the contract owner can invest. During the accumulation period, the investment return and value of the annuity will fluctuate in accordance with the investments selected. A contract’s accumulated assets can be converted into a guaranteed stream of income for the future.

1Guarantees are based on the claims-paying ability of the issuing company and do not apply to the investment performance or safety of the amounts held in the variable investment options.

Variable annuities are long term investment vehicles designed to help investors save for retirement and involve certain contract limitations, fees, expenses and risks, including possible loss of the principal amount invested. The investment return and principal value may fluctuate so that the investment, when redeemed, may be worth more or less than original cost. As with many investments, there are fees, expenses and risks associated with these contracts. All guarantees including the death benefit payments are dependent upon the claims paying ability of the issuing company and do not apply to the investment performance of the underlying funds in the variable annuity. Assets in the underlying funds are subject to market risks and may fluctuate in value.

Withdrawals of taxable amounts will be subject to ordinary income tax and possible mandatory federal income tax withholding. If taken prior to age 59½, a 10% IRS penalty may also apply. Withdrawals affect the variable annuity’s death benefit, cash surrender value and any living benefit and may also be subject to a contingent deferred sales charge.

Variable annuities and their underlying variable investment options are sold by prospectus only. Investors should consider the investment objectives, risks, charges and expenses carefully before investing. This and other information are contained in the prospectus or summary prospectus, if available, which may be obtained from your investment professional. Please read it before you invest or send money.

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