Pros and Cons of Annuities

What are the Pros and Cons of Annuities?

It may send your mind into an infinite loop to imagine using money to buy money products, but that’s just how the financial world works. And Americans did just that! In just the third quarter of 2016, USA investors analyzed the pros and cons of annuities and spent $51.3 billion on them.

Sound like a lot? Maybe not. Turns out that we bought $58.5 billion in annuities in the same quarter of 2015, which represents a 12.3 percent decline in one year.

What’s going on here? Have the tides turned or are more investments clogging the market and our wallets? Read on for a major return on investment.

Pros and Cons of Annuities 101

Mastering annuities can take an entire semester or more in a hard-core economics school, but we’ll try to break it down for you.

Annuities are retirement-focused investments that pay you money.
You can pay a lump sum (one-time) for the annuity or schedule payments, depending on the annuity and your Advisor.
Excellent option for tax-deferred retirement income
No annual contribution limit
Not all annuities are the same. They include:
- Fixed (Guaranteed income no matter what happens to the market or the insurance company, but these annuities do not adjust with interest or the cost of living)
- Indexed (Flexible, but also returns a guaranteed minimum)
- Variable (Totally dependent on how the funds you select to do in the market, this is your riskiest option)

Pro: Fee-Free Fix!

If the idea of paying fees for an annuity just doesn’t add up, an indexed or fixed annuity may be an ideal match for your investment portfolio. You can buy these types of annuities from an insurance company and will not be assessed an administrative fee on top of what you put into the fund unless you add a rider or a link to the rider.

Buyer beware! These types of annuities don’t have administrative fees, but that doesn’t always stop less than respectable agents from trying to tack them on.

And you probably know we can’t get something for nothing.

As you enjoy the benefit of the no-fee annuity, keep in mind that you will (more than likely) experience fees if you withdraw from that annuity before the agreed-upon period ends. When you do need to make withdrawals, you may face surrender charges.

Financial companies have to make their money somewhere. But if you purchase this type of investment, choose one that has a term you can be happy with long-term and you’ll be feeling free.

Con: Early Demise Can Bring Surprise

And we aren’t talking about to the decedent.

When you purchase an investment, you’re looking into that crystal ball of the future for a long, long way off.

Unfortunately, life tends to get in the way of our plans.

Let’s say Person A purchases a 10-year annuity at age 55, expecting the annuity to come due at age 65. Person A then passes away at age 57, 8 years before the annuity date.

As the University of Wyoming explains, if the annuity holder dies “early,” the annuity could lose value as it passes on to the next property holder (the designated recipient from – in this case – Person A’s will).

Of course, it’s good to plan for the future and no one knows what the future will hold, so not purchasing annuities out of fear can really hold you back.

Pro: Income Stream, Flood, or Trickle

For many, annuities are a choice because of their income-providing potential.

You may be thinking, if I have the money, why am I going to give it to an Advisor who will then slowly trickle it back to me?

It almost makes this consideration of pros and cons of annuities more like no and cons!

But let’s take a step back.

Yes, you’re handing over a (sometimes large) lump sum of money.

But these “immediate annuities” really do provide you that stream of income because you get back guaranteed payout for as long as you live. Whether that amount surpasses your lump sum or not, you continue to receive the payments.

Whether you’re about to be swimming in a small creek or a huge basin of water-slash-income for the rest of your life depends on how you set things up with your Advisor.

Con: You Need Money to Make Money

Unlike stocks which you can literally purchase for a couple of bucks a share or bonds with just a small out of pocket cost, annuities don’t come cheap.

Some annuity advisors suggest you start with a minimum of $10,000 to $25,000 investment. Remember, when considering the pros and cons of annuities, you need to keep in mind that the annuity is supposed to be an income stream for life. That $20 for the hot stock on the market won’t get you very far in annuity land.

Also, the more money you can invest in an annuity, the better rates you can get. It may not seem fair that those who have the money to assure themselves a better income stream later in life may not need it.

But that’s how the annuity world works and once you understand it, you can play it to your benefit.

Ask your Advisor if he or she offers flexible premium annuities. Not all of them do, but you may be able to enter into this type of annuity with a minimum purchase of just $100, which definitely does seem more “flexible” than $10,000.

Cash In on Your Experiences Here

Still feeling like less than a hundred bucks at all the pros and cons of annuities?

Don’t worry. Help is available.

Free help. With no administrative fees or early withdrawal penalties!

Click here to sign up for a free consultation and annuity review. (Guess you CAN get something for nothing!)

By the way, be sure to ask your prospective agents about their experiences and length of time in the business. We don’t want to scare you, but if your Advisor goes out of business, you may lose your annuity investment, too.

This depends on the investment and other legalese, but it’s all the more reason to be informed, to make good choices, and to not get ripped off.

We’d love to hear from you, too, about your annuity experiences. Have you ever had to make an early withdrawal? Did your annuity consultant assist you?

Please share in the comments below and let’s help each other start saving!

Does Your State Protect Your Annuities From Creditors?

Annuities are like other financial assets. Often times, litigation efforts and creditors are able to gain access to them. As a result, the money you worked hard for is at risk.

Protect Your Annuities

O.J. Simpson & Florida Exemptions For Annuities

Remember O.J. Simpson? I’m not talking about the notorious car chase in the Ford Explorer. According to MarketWatch, O.J made some poor financial decisions in Vegas. Consequently, those decisions led to lawsuits that ordered him to pay back creditors. O.J. put most of his money in annuities in south Florida where he lived at the time. Lucky for him, statutes in the state of Florida shielded his annuities from being touched by creditors. “If the glove don’t fit, you must acquit” may as well be, “If annuities hold your cash, you’ve protected your own a$*”. You get the picture.

Florida is one of the states that many business owners, physicians and wealthy investors choose to invest, as 100% protection is offered by the state’s annuity laws. In fact, Florida state law protects your home once it is paid off in full. This means that if you’re ever sued, or creditors attempt to collect your debt through he seizure of assets, they cannot touch your home or your annuities. Yet, many annuitants don’t know the laws of their state.

Plan For The Worst, Hope For The Best

Why is protecting your annuities important? You can never really plan when you’re going to be sued. However, IRA’s and retirement planning can protect your assets. How? Your retirement plan is protected under federal law even when filing for bankruptcy! Do I have to spell it out for you? Find out if you live in one of the states that protect your annuities!

Which States Offer 100% Annuity Protection?

Some states offer 100% creditor protection. Arkansas, California, Florida, Georgia, Hawaii, Indiana, Texas and Louisiana offer 100% annuity exemption. Maryland, Michigan, New Mexico, Ohio, and Oklahoma do as well. Kansas exempts annuities that have been maturing for a year or longer. Tennessee allows annuity protection from creditors only if it’s part of your retirement plan.

Some states allow an exemption only if you have beneficiaries such as a spouse and/or children. New York exempts only a decided amount after a “due and proper amount” is paid to the creditor(s). Furthermore, states such as North Carolina, New Hampshire, Mississippi, Maryland and Connecticut offer no annuity protection from creditors at all. Statutes are different from state to state. As a result, you have to know if you are protected.

Your Guide: Which States Protect Your Ass-ets

Finally, you have to consider your beneficiaries. Your spouse and children may depend on your assets in case of medical emergencies, or a college fund. In addition to living in a state that has fair statutes for your annuities, you may also want to learn about the different kinds of annuities. While your bank may offer some insight, it’s better to know for yourself from a source that doesn’t have a vested interest in your investment. Read my blog on fixed indexed annuities for details about the most popular annuity that consequently gives you the highest interest. Use this as a guide to check the statutes in your state.

The Importance of Understanding The Different Types of Annuity

Understanding Different Annuities

Receiving A Paycheck For The Rest Of Your Life Sounds Great, Right? This isn’t a dream. It’s actually possible thanks to annuities.

Annuities are a form of life insurance. You pay a sum of money (called a single premium annuity, not to be confused with a SPIA). This can be either all at once or over a period of time (flexible premium annuity). In return, your money does not go down (only if you buy from one of our advisors), it only goes up (depending on the crediting option you choose). Also if you buy an income rider (you will pay a fee, should only be about 1%) you receive regular disbursements of that money until you’re no longer living.

A staggering 84% of Americans believe that this is a beneficial concept, yet only 14% have actually purchased an annuity themselves.

A primary reason for the hesitation: A lack of knowledge around annuity options and uncertainty around purchase procedures.

It’s important to understand that not all annuities are created equal before you sign on the dotted line.

Interested in learning more? Let’s dig in!

The Big Two: Deferred Annuities Versus Immediate Annuities

Our discussion on the different types of annuity must begin with the two major categories: deferred and immediate.

Deferred Annuities

Put simply, deferred annuities are those that you don’t receive until a set time in the future. Essentially, you pay your premiums in full, then wait. Some you can add money to called a flexible premium. I like the flexible premium annuities because they allow you to make additional deposits and all of the money matures at the same time. Again this is only available when you buy through our network of advisors. We have removed 90% of the annuities on the market and only allow the top 6-8 insurance carriers to be sold. That said other insurance people or advisors will sell you anything just to make a commission, we make sure you don’t get screwed.

The obvious advantage to this type of annuity? The longer your money sits, the more it grows. In addition, the investment remains tax-free until you’re ready to pull it out, at which time it’s taxed at the ordinary income rate. Again any return you made in the annuity comes out first and you pay tax on that.

Are Deferred Annuities Beneficial?

This type of annuity is also beneficial in the sense that it works with almost every pocketbook and timeline. Got a large sum of money you’re ready to invest? Great, you can put it all on the table and pay your premium immediately, again up to $1,000,000 (and we do a few per month that are above this number). Rather wait and pay your premium off over time in regular intervals, flexible premiums? That works too. Most annuities start at $10,000 or $25,000.

Yet, while time is on your side in that regard, it might be against it in another. The main drawback to this type of annuity is that you have to wait to access it.

If you make withdrawals before you reach retirement age, you’ll not only pay the income tax on your earnings. You will also be subject to some pretty hefty early withdrawal penalties and surrender charges, some of which could be as high as 20% of your investment when you buy outside of our network. REMEMBER do NOT allow anyone to sell you an annuity that has a surrender charge that is over 9% MAX MAX 10% and the term should not exceed 9 years. Most should be 6-7-8 years.

Immediate Annuities

The other type of annuity is an immediate one.

Contrary to deferred annuities, which have an accumulation period during which you must wait to receive your earnings, immediate annuities start paying out no more than one year after you’ve paid your premium.

While most people choose to invest in deferred annuities when they’re fairly far from retirement age, those closer to that magic number might want to invest in immediate annuities.

This way, they’ll be a shorter window of time between when they make their payment and when they begin receiving their money.

Another advantage to these types of annuity is that they can provide a useful tax break. Here’s the breakdown:

The payments you receive on an immediate annuity are divided into interest and principal.

While the interest is taxed as ordinary income, the principal on these types of annuity remains tax-free, because it is essentially a return on your initial investment. This is known as the exclusion ratio.

Yet, one of the main drawbacks to an immediate annuity? It expires when you do, so the window of time to access it might be narrow depending on when you choose to invest.

Annuity Sub-Sets

Once you’ve decided whether you want to invest in a deferred or immediate annuity, there’s one more step to take. Now you must decide if you want to invest in a Fixed (Traditional), Fixed Indexed (FIA) or Variable Deferred Annuity.

Fixed (Traditional): This type of annuity is essentially a savings account offered by your insurance agency. The agency will use its in-house portfolio to determine the rate at which your money will build interest during the accumulation period. Lock in your interest rate in order to guarantee yourself that rate. That’s the good news. Most fixed products are 3 years to 7 years. The sweet spot as of this post is 5 years.

That same lock-tight security applies to your payments on these types of annuity. The amount you receive is then set. It will not change over the course of your lifetime.

This type of annuity is one of the safest and is advisable for the more risk-averse population, generally those 60 and older.

Fixed Indexed (FIA)

While Fixed Traditional deferred annuities lock you in a certain interest rate, the interest provided under FIA (index annuity) annuities is based on how the stock market performs.

Consequently, your interest rate is determined not by an internal portfolio, but by the performance of an external index. One example is the S&P 500.

While the credited interest is subject to these external conditions, it may fluctuate during the accumulation period, but it will never fall below zero.

Variable

Interest rates are subject to market volatility. A company’s rate lock does not offer security. They could even go way below zero. It is like owning mutual funds. When the market drops 20% your variable annuity will fall even more then 20%.

Such conditions can be risky. Your insurance company will set a minimum payment amount at the onset to ensure that no matter how the market dips and surges, you’ll have a guaranteed payout at the end.

PLEASE REMEMBER the FEES on this type of annuity are 3-5% and have market risk. Most of our clients do not buy this unless they are in their 30’s max 40’s and have 20 years before they retire.

Making the Move: The Right Types of Annuity For You

Not sure if an annuity is right for you? Or maybe you’re sure you want to invest, but you don’t know where to start or who to talk to?

That’s why we’re here. We make it easy to pick the investment plan that best fits your budget, goals, and future dreams.

Learn more about the services we provide, browse our blog for relevant topics, or leave a comment below and let’s start saving!

What Is A Tax Deferred Annuity?

Tax Deferred Annuities

So you’ve decided to stop stuffing money under your mattress (or the bank account equivalent of putting it in a savings account with 0.000001% interest).

Congratulations! Before you lose your motivation, let’s explore why a tax deferred annuity could be an ideal option for those funds.

Although annuities are often associated with retirement income, you do not have to be on your way to your sunset years to purchase these products. Instead, read on to decide what’s the best investment for your needs. We promise this will make cents!

Just the Tax Facts

First up, you may have heard of tax-deferred annuities called by another name: “fixed tax deferred annuity.” For sake of brevity, we’re going to lop off the “fixed.”

One of the first things you need to know about this investment strategy is that it is a contract. You are entering into a commitment to yourself and your insurance company. (So choose wisely!)

Second, this type of annuity may or may not guarantee income.

Wait! Don’t rush off and quit your job just yet.

There are, indeed, benefits:

Annuities are, as their name says, tax-deferred. Other investment strategies such as certificates of deposit are not. This benefit leads to compounding interest!
Income stream, guaranteed for life if you choose this option.
Safety, in that the annuity is backed and sold only by qualified life insurance companies that hold reserves equal to the withdrawal value of your policy.

There are also, oh yes, drawbacks:

The biggest drawback of tax-deferred annuities is for those people who are just commitment-prone. You may think an annuity is the hottest thing on the planet, but what happens when you change your mind?

Fees and surrender chargers. That’s what happens. Penalties can be huge for early withdrawal on annuities, so just don’t do it. Once you commit, do not quit. Please remember NEVER EVER buy a product that is longer then 9 years. Most should be 6-7-8 years in term before it’s out of surrender.

Tax Deferred Annuity for You and Me

OK, maybe you’re not ready to purchase that annuity just yet, but your neighbors, friends, coworkers, and business owners all are.

The Insurance Information Institute studied insurance product purchases from 2006-2015 and saw an upswing in deferred annuity asset purchases. In 2015, the last year of their study, consumers bought:

$1,922 billion in variable annuities
$448 billion in fixed annuities
$334 billion in indexed annuities

Although 2013 was the highest for annuity purchases in the time frame studied, the three most recent years (2013, 2014, and 2015) soared over all of the other years in the timeframe.

So who are these buyers pushing up the numbers?

It’s not who you think.

It may seem like only the rich can afford to purchase insurance products that will make them richer. But really, 70% of annuity buyers have household incomes under $100K.

And if you think tax deferred annuity buyers are only a certain age, think again. Please remember most insurance carriers only allow you to buy income rider annuities after the age of 50. But if you are looking for safety and tax differed growth you can purchase these at any age. Please remember there are IRS penalties if you take the money our before 59.5 but we can show you have to push this back and not be taxes, through a 1035 exchange.

In 2015, USA Today reported that millennials were snapping up annuities. This actually makes sense, because annuities really do benefit you in the long-term. Millennials have a long way to go before they’re able to tap into their retirement plans, so they’re thinking future-forward and putting money away for decades down the line.

It’s Guaranteed: Death and Taxes

Ah yes, the old cliche, that you can only count on two things in life: death and taxes.

Well, interestingly enough, the two commingle pretty well when it comes to tax-deferred annuities.

It sounds a bit like something out of the Marvel universe, but you should ask your annuity pro (your financial advisor) about the Death Benefit Rider.

Not all insurance companies offer this. And of course, the riders vary by company, so you really do need to ask for clarification.

There are two basic kinds of death benefit rider annuities:

Guaranteed payout of the initial amount (lump sum) invested, with – of course – reductions for any withdrawals you may have taken out; or
Guaranteed payout of the highest recorded value of the contract.
Guaranteed payout with rising income.

The Sky (and Your Age) is the Limit

Like other retirement investments, tax-deferred annuities have their own set of rules and regulations.

Contributions come from pre-tax income, when you buy them inside of your IRA’s / qualified accounts.
You can start withdrawing after age 59 and a half but remember taxes come our first on any growth you have had.
You can contribute as much as you want to your tax deferred annuity. Most start at 10,000 or 25,000 and require approval for over 1,000,000

The exceptions and fine print can really make your head spin, such as lifetime limits, income amounts and crediting options (how you make money in the annuity).

Basically, there are options, but do not hesitate to wave your hand and ask for help!

Important note: The government, insurance agency representatives and the Securities Exchange Commission are always coming together to refine these rulings. It is best to talk to your investment professionals to ensure you’ve got the latest and greatest details.

What to Do with an Annuity

Aside from, of course, enjoying the benefits of your good long-term planning investment!

And no, we aren’t advising to withdraw it all and hit the horse races.

You should know that you do have the option to withdraw your entire investment as a lump sum once the investment period expires or most index annuities will allow you to withdrawal 10% per year.

You can also roll the money from the expiring tax deferred annuity over (similar to how you would do if you have a certificate of deposit that is expiring) and pay zero taxes on that transaction. This transaction is called a 1035 exchange. We can help walk you through this process.

Be warned! Shady advisors hide this option from clients to make another commission. Do not fall for this, get a second opinion.

Let’s Talk

We’d love to hear if you fall into the 70% of annuity buyers in the income range studied. Have tax-deferred annuities helped you planning out your future?

Already have an investment strategy? That’s OK. How about a free review and comparison of where you may be better placed with your funds? It’s just too easy to get ripped off these days.

We want you to be informed, make good choices, and be excited about your future. The best way we’ve seen to do this is to educate, educate, educate. Once you purchase the wrong tax deferred annuity or put too much money into an annuity that is not tailored to your needs, it can be hard to come back.

Whether you’re feeling risk-tolerant or risk averse, let’s talk tax annuities together.

Join the conversation below. You can also post a request for more information or click here to receive fast, no-cost, no-commitment information tailored for your investment and future financial needs.

How to Get Guaranteed Retirement Income for Life

Retirement Income for Life

Hitting retirement and having no guaranteed income can be detrimental to your health.

According to the American Psychological Association, older individuals with lower socio-economic status are at risk for increased mortality rates, higher stroke incidence, higher progressive chronic kidney disease, and lower health-related quality of life.

So, having a secure way to receive a steady income after retirement will help you live a full life.

But how do you go about doing that? How do you get guaranteed retirement income for life right now?

Well, we’re here to talk about how you can get a guaranteed income stream with an annuity and avoid the scammers because they are out there. So, let’s dig in.

How Does An Immediate Annuity Work?

A single premium immediate annuity (SPIA) is probably what you’re thinking of when you think guaranteed income for life.

You might be on the cusp of retirement, and worried about your income needs.

A SPIA allows your to start receiving income right away. It’s an agreement with your insurance company that allows you a guaranteed stream of income

Your insurance company will then calculate your monthly income based on a few things.

The type of annuity you purchased
The insurance company, each one prices these different and you should shop this around
Your life expectancy based on your age and gender
And the term of the annuity you’ve chosen, how long you would like your income stream gauranteed for

Your Choices When It Comes to Immediate Annuity Income for Life

Inflation can happen. It’s a risk you take when investing in pretty much anything.

But you can have your insurance carrier give you a variable payout in case of inflation.

It really depends on if you want to maximize your payment now or not.

A fixed payout will give you the most income today. But a variable payout will mean having to do with less right now. If you are retiring soon, this might be the right option as you have some income from your current job still trickling in. I would suggest looking at index annuities with a life time income rider if you would like rising income.

If you do go with a variable payout/rising income option it will most likely be tied to a stock market index with a minimum guaranteed amount.

The purpose of an annuity is to minimize risk. So go over the options and see which options will help you have guaranteed income for life.

What Are the Variables and Terms of an Immediate Annuity?

A term in insurance speak is the amount of time your guaranteed annuity income will last.

You can specify the number of years the annuity will last. This may not give you guaranteed income for life.

The life annuity will provide you income for life. This means, of course, for as long as you, and you alone shall live.

There are joint-life annuities. If you are married, a joint-life annuity option might be best.

If one spouse dies, the annuity continues to be paid to the surviving spouse.

What Variables Depend on Age And Gender?

This essentially affects your payout amount.

Of people over 100 years old, 85% are women.

Essentially, women live longer than men on average. And insurance companies take this into account.

They typically pay out LESS for women than men because of the life expectancy gap.

What Are Typical Rates for Immediate Annuities?

If you’re looking at obtaining guaranteed income for life through an annuity, then you probably want to know the rates.

Remember, you’re buying an annuity for income guarantees, then returns become secondary.

If you want higher returns, you have to take risks. And risks could leave you broke.

But, even with a guaranteed annuity, the longer you live the greater the returns.

So, don’t compare the payout rate or calculated rate of return on an immediate annuity to compare this to any other kinds of investments.

Instead, the rate you’re looking at should be used for comparison between annuities at different insurance companies.

One of the benefits of an immediate annuity is that any other capital you don’t use to buy the annuity can go to other investments.

In essence, you can build your wealth with an annuity coupled with other investments.

And the security it affords can’t be measured in the monetary rate of return estimates.

Immediate Annuities Are Only a Portion of Retirement Savings Income

This is not meant to be all the income you receive during retirement.

If you calculate the annuity rate you will receive, you will only get $558 dollars a month if you are age 65, male, live in Tennessee, and purchase the annuity for $100,000.

That’s maybe enough to buy groceries and maybe pay a bill or two.

If you want the highest payment, you will have to give up access to the 100,000 you put in.

You will want to have a diversified portfolio of ETFs and mutual fund and such to maintain your standard of living.

You might have guaranteed income for life, but that’s more of a safety net to ensure survival if other investments fail.

Again, this is more about peace of mind than returns or riches. Although, it can help you increase your wealth in the long run.

Be Careful When Buying an Annuity: Watch For Scams

You might be tempted to go with the insurance company that offers the highest payout.

Don’t. You need to do your research.

You will depend on the insurance company to remain good on their word when it comes to guaranteed income for life.

They must have an AM BEST rating of A- or better when it comes to financial strength ratings.

Only a fraction of the companies out there will give you the best deal and have your interests in mind. All the others are either not worth looking at or are downright scams.

Payouts between companies can vary widely. So make sure you compare your options and choose wisely.

The Bottom Line On Guaranteed Income for Life

If you’re about to hit retirement, you probably do want that safety net of guaranteed income.

You probably want to get an annuity with the right companies that will take care of you. And you probably want to mitigate the risk of not having an income after retirement.

If you do want these things, sign up for a free consultation to get more information on how to find the right annuity for you.

What Happens If I Die Before I Begin To Receive Payments From My Annuity?

In the unfortunate event of the contract owner’s death before income payments begin, the beneficiary may receive a death benefit from the annuity.

In some contracts, the death benefit will be based on the account value. Other contracts use the surrender value or other applicable contract value to calculate the death benefit. What if you have a spouse? Does he or she have inherent rights?

If your spouse is the surviving joint owner or sole beneficiary, then he/she may have the ownership rights with all rights and privileges of the original owner, as allowed by IRS regulations.

Two Distinct Phases of an Annuity

What Are the Two Phases of an Annuity?

The Accumulation (or Investment) Phase:

This is the phase in which you add money to the annuity and collect interest in some form. A purchased deferred annuity is necessary when this option is utilized. You can purchase one in one lump sum. You can make investments periodically over time.

The Distribution Phase:

This occurs when you begin distributions from the annuity. Two general options for receiving distributions are available.

The first option allows some or all of the money in the annuity to be withdrawn in a lump sum. The full contract value can be “rolled” into another agreement without paying taxes. This is called a 1035 exchange. The second option while using an income rider is to turn on the income rider. A lot advisors positioned variable annuities win the past with very expensive riders (3-4%). Their clients have never turned on the rider.

If you have an income rider and you have either not turned it on or just turned it on, you should have it reviewed as soon as possible. Most of the time you can LOWER your fees from 3-4% to 1% and get 10-30% more income! Contact me for more information. I’m here to help you.

What Is A Surrender Charge?

What is a Surrender Charge?

Annuities: Withdrawals At no Charge

A deferred annuity may be surrendered to receive a lump-sum payment of the account’s value. Most annuities have a surrender period that allows withdrawal at no charge. Withdrawals during the surrender period (meaning during the contract term, remember only allow this to be a MAX of 10 YEARS!) are usually subject to charges based on several factors including the account value and the number of years remaining. DO NOT accept any surrender charges over 10%. If you have any questions please contact us. Some products will have 14% or 20% surrender changes. Insurance companies should not sell these!

Surrender-Charge Free Withdrawal Options

Annuities are long-term instruments designed to accumulate money for retirement. Consequently, they provide the best possible benefit if left intact. Many of our products provide a number of options to withdraw because you should have options. Hence, options include 10% penalty-free withdrawals. Most noteworthy, they include interest withdrawals through the easy systematic payment program. Certain products withdrawals prior to age 59½ may be subject to restrictions and a 10% tax penalty. This is because of IRS regulations. These options vary by annuity, yet may include:

10 % annual withdrawals.
5% annual withdrawals Waivers for certain medical conditions
IRS required minimum distributions (RMD freindly)
Substantially equal periodic payments

Are There Any Fees For My Fixed Annuity?

What Are The Charges For A Fixed Annuity?

Most annuities do not charge up-front sales charges, rather they have charges for withdrawals before the end of a stated period. A fixed and fixed-indexed annuity do not have administrative fees, although interest crediting rates take into account expenses related to the product.

Variable Annuities

Variable annuities may involve ongoing maintenance and administrative fees to provide guaranteed death benefits and cover expenses related to the product. When purchasing a variable annuity, information regarding contract charges in the contract’s prospectus is available.

All this means is that with an index or fixed annuity there are no fees. Therefore, if you buy from the right insurance carriers, you’ll have little if any fees. Say you invested $100,000 into a fixed or index agreement and made no money. As a result, at the end of the term, you would therefore still get your $100,000 back. Some index annuities have a guaranteed minimum amount of a return, sometime this is as much as 1% simple interest.

In conclusion, say you purchased an index annuity with a 7 year term and it had a minimum of 1% simple interest. You made no money in the contract because the S&P 500 was down 7 years in a row. They would have to give you $107,000 at the end of the term.

Access to Funds: What if I need to access my money during the accumulation phase?

Access to Your Money

What if I need to access my money during the accumulation phase? Annuities are designed to accumulate money for retirement. Hence, they provide their best possible benefit if left intact. This is without taking out any withdrawals. Some of our products offer withdrawal options in your annuity that include 10% penalty-free withdrawals. and first-year credited interest withdrawals. Be careful here, some annuities only allow 5% or interest only so please make sure you understand what options you have before you purchase an index or fixed annuity.

Withdrawals may be subject to early withdrawal charges and taxes. Meaning, if you take over the allowed amount of (5-10%) you will have to pay surrender charges and you will always have to pay taxes on any profits you made.