WHAT IS A FIXED OR INDEXED ANNUITY INSURANCE PRODUCT?
To start Annuities are FINANCIAL VEHICLES that can be sold only by insurance companies. Basically, an annuity is a contract between you and an insurance company, which promises to pay you an immediate or future income in exchange for the lump-sum payment or premiums that you pay. The payments specified in the annuity contract will be paid to you possibly in your retirement (or, in some situations, to your beneficiaries after your death).
Popular Annuity Options:
1) Annuities can be used to help ensure a FUTURE STREAM OF GUARANTEED INCOME, as well as to help ensure that your spouse and/or designated beneficiary will be taken care of in the event of your death. Many types of annuities exist, and most of them include a death benefit option.
2) Another option some Annuities provide is an IMMEDIATE STREAM OF GUARANTEED INCOME. If you elect to ANNUITIZE your annuity contract, you are choosing to receive your payments on a schedule that can be based on a single or joint life expectancy (for you and your spouse, for example) or for a specified period of time. Once you begin receiving payments, most annuity contracts do not allow money to be paid to your heirs, other than your designated joint-life beneficiary, in the event of your death. However, if you die before Annuitization begins, your designated beneficiary typically will receive a death benefit at least equal to the net premiums paid.
3) OFFERS GUARANTEES: Some annuity contracts may offer refunds or guarantees, allowing your beneficiary to receive the remaining amount upon your death (the accumulated value or premiums paid, whichever is greater).
Let Us Help You Find the Right Annuity
We shop for the best rates, and lowest fees
With our large network of national annuity companies, we can go out and within a short amount of time find the annuity that most closely meets your needs. With so many choices the field of annuities could be complex to understand. It’s our goal to find the annuity(s) that are relevant to your retirement goals and with the guarantees you want so that you always get the best value for your money. We do this by scheduling a time to meet with our clients to do a proper needs assessment. We believe this process is critical to finding the correct product with the best benefits, and ensuring that an annuity is the right choice for our clients.
Let us educate you…
If you are serious about finding the best retirement vehicle to establish you a worry-free retirement, then it only makes sense to understand what options are available and which fit you and your family. We take pride in the process we go through to educate our clients, and it’s important to know what you’re buying as your decision today will have a dramatic impact on your retirement in the future. Learn from us and avoid making the costly mistakes that others have made when buying an annuity.
Annuities and Riders
MANY RIDERS AVAILABLE WITH ANNUITIES TO ADDRESS LIFE SITUATIONS: Many annuities offered today typically will add features to the base annuity product to address different “Life Events”. They are the "options" that come with your vehicle; the added extras that make it everything that you want it to be. These riders may not suit everyone and are designed for specific circumstances.
Take a look at some of the common annuity riders:
1. Life-Time Income Rider – This rider creates a guaranteed life time income for the owner of the policy. It works by distributing the money that has grown from the start of the policy at a set amount that can be received quarterly, annually, etc. The kicker is that even after all of the initial money plus interest is received back, the payments continue for the rest of your life like nothing ever changed. For more information please click the link and schedule a free call with us: QUESTIONS
2. Long-Term Care Rider – Many companies will offer a long-term care rider to attach to contracts. This rider is designed to help ease the strain of unforeseen events. The rider will typically have a feature that will allow for waived or lessened withdrawal charges in the event that the owner is confined to a nursing home or other long-term care facility. These are generally only needed if the event happens within the first year of the contract. Look for contract specifics to determine the length of time necessary to qualify for long-term care rider.
3. Boosted Income associated with Long-Term Care event: Some companies now offer a way for the annuitant to have their income stream doubled for a period of 5 years offsetting more of the cost a long-term care scenario would create. This feature is very attractive to those who may not qualify for an actual Long-Term Care product. ( If you do not have a provision for a Long Term Care scenario, we also have products to protect you and your family. Schedule a call or meeting HERE )
4. Terminal Illness Rider – After the first contract year, if you are diagnosed by a doctor with a terminal illness, you will typically have the option of withdrawing a percentage of the available account value without occurring early withdrawal charges. The percentage allowed to be taken without charge will vary from company to company and product to product.
5. Joint and Survivor – Though this isn't always considered an annuity rider, the joint and survivor option allows the payments from the annuity to continue after the death of the first payee through the life of the second.
6. Joint and Half Survivor – Similar to a joint and survivor option, the joint and half survivor allows the payments to continue after the death of the first payee. The only difference is that after the first death, the payments are then cut in half to the second payee. This assumes that with the first person gone, the payee will only need half the income they needed prior to the first's death.
7. Life Expectancy Guaranteed Income – This is an option that allows you take an income over the course of your calculated life expectancy. Often if you die before this period, your beneficiary will continue to receive the remaining payments. Be careful however, some companies do not mention that if you outlive your life expectancy, the payments will run out.
8. Annuity Death Benefit Rider – This ensures that if you die before the payment period begins; the contract beneficiary will receive the greater of the account value or cumulative premiums paid into the account.
The riders above are just the general available riders and there are a seemingly endless supply of riders and options that can be added to a fixed annuity contract. The important thing is to make sure the person assisting you understands the full offerings of different fixed and indexed annuities for your particular needs and for the state in which you live.
Also remember that as with adding features to a new car, adding riders and options to your fixed annuity contract will also add additional costs. Annuity riders can help you customize your annuity product to your expectations.
Using Annuities for Estate Planning?
AN ANNUITY COULD BE A SIMPLER WAY OF PLANNING FOR THE FUTURE OR IMMEDIATE INCOMES OF LOVED ONES: If you would like to use your annuity to help provide for your heirs, make sure to examine the contract closely for specific beneficiary allowances.
Other Basic Information
Generally, annuities have contract limitations, fees, and charges, which can include mortality and expense charges, account fees, underlying investment management fees, administrative fees, and charges for optional benefits. Most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. Withdrawals of annuity earnings are taxed as ordinary income and may be subject to surrender charges plus a 10 percent federal income tax penalty if made before you reach age 59½.
Withdrawals reduce annuity contract benefits and values. Any guarantees are contingent on the financial strength and claims-paying ability of the issuing insurance company. Annuities are not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association. For variable annuities, the investment return and principal value of an investment option are not guaranteed. Variable annuity sub-accounts fluctuate with changes in market conditions; thus the principal may be worth more or less than the original amount invested when the annuity is surrendered
Variable annuities are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
5 Reasons why you might want to own an indexed annuity:
1. Protection against market downside with a indexed annuity, you get the potential market gains in an up market without the worry of losses in a down market.
2. Gains are locked in – All gains from your index option are locked in forever, so you’re protected from losses even if the market goes down in the future.
3. Income floor – Most annuities have a minimum rate of return, so your portfolio will not lose any value even if the market is stagnant or decreases.
4. Predictable Income – As people approach the retirement years, the focus is usually “How Large is the nest Egg” instead of “What kind of income stream will it provide me and for how long?”
5. Any commissions or fees are paid through the insurance carriers.
6. You’re in control – You are the owner of your indexed annuity. If you want to take money out at any time, you can do so. It’s your money.
If you have additional questions don't worry! Give us a call our over the phone meetings are free and easy to set up around YOUR schedule!