You should never ask if you win or lose with your money. How can an annuity help you? How can you sort through all the noise to make an informed decision?

Click a commonly asked question below to see the answer.

What is a tax deferred annuity?

It is a tax-advantaged product issued by an insurance company where long term financial needs can be solved better than with most other financial alternatives.

What is the major advantage of annuities?

Interest (earnings) accumulates income tax deferred until dollars are withdrawn. This helps clients build substantial funds for their retirement and can give them an income they cannot outlive.

Is an annuity safe?

Yes, insurance companies are the only financial institutions that may underwrite and issue annuity contracts. Fixed annuity values are backed by the general assets of the insurance company. The Department of Insurance in each state must issue licenses to the insurance company and their agents who solicit business in that state.

Who wants to own an annuity?

People who want a safe way to reduce taxes; people who want to decide when to pay taxes.

What kind of dollars are going into annuities?

Maturing CDs, checking and savings accounts, money market funds, mutual fund accounts, stocks and bond funds, 401k’s, IRA rollovers, Treasury bonds and bills.

Since a withdrawal of principal is tax-free (non-IRA), can principal be withdrawn first and then interest?

No, the IRS considers that interest earnings are withdrawn first. Naturally, any portion of a withdrawal exceeding interest earned would be a tax-free return on principal (non-IRA).

How is the interest rate declared after the initial guarantee period?

Current market conditions and the insurance company’s investment portfolio will dictate renewal rates. MOST COMPANIES use the “Portfolio Rate” method to determine rates after the initial guarantee period.

How will clients know their annuity balance?

Most companies provide a statement of annuity value on each policy anniversary or whenever requested by the policy owner.

Will the annuity be tied up in probate proceedings?

No! If you list a “named” beneficiary, other than your estate, annuity dollars will avoid the delay, expense and frustrations of probate.

Will the beneficiary be taxed on the interest that has accumulated inside the annuity?

Yes, beneficiaries will be taxed on the tax-deferred interest when they receive those dollars. However, if a beneficiary is the spouse of the owner and the owner dies, he/she may elect to continue the annuity and postpone taxes. Once again, the client decides when to pay income taxes. If the beneficiary is not the spouse and the owner dies, then dollars must be totally withdrawn within five years or they may be received over the beneficiary’s life expectancy. However, this latter option must be elected during the first 12 months following the owner’s death.

Is the annuity identical to an IRA?

No. Although the annuity is often used as a vehicle for an IRA, many sales are for non-IRA annuities; therefore, dollars deposited into a non-IRA annuity are not deductible. However, there is no government imposed ceiling on how much premium can go into an annuity and distributions do not have to begin at age 70 ½.