Annuities: It's All About Your Life and Living Benefits
Did you know that Annuities were introduced in the Roman times to provide a lifetime pension type income stream to the Roman soldiers and their families?
Annuities are the only financial product with lifetime income that guarantees payments regardless of how long you live. Annuities provide a combination of safety & growth for your hard-earned dollars. Annuities can be used to build and protect your 'nest egg' and the closer you get to retirement, the more important it becomes to protect your retirement nest egg.
The buying power of today’s money is reduced by tomorrow’s price and inflation increases. To help protect against this, some annuities can provide interest rates that will keep pace with inflation and reduce its risk. So whether you are seeking a combination of safety and growth for your hard-earned dollars, desire some flexibility and/or liquidity, want a simple guaranteed rate of return or need a guaranteed income stream you can never outlive, we have multiple carrier and product solutions to fit your needs.
Single Premium Immediate “Income” Annuities
Single and Flexible Premium Deferred Annuities
Fixed Rate Guarantees
Joint and Survivor Annuities
What exactly is an annuity?
An annuity protects your principal, and provides guarantees while you get a good return, and income for life. An annuity is essentially a great savings plan. It defers taxes allowing money to compound more quickly. An annuity is a contract issued by a life insurance company that allows the client to set aside money today (premiums). In exchange the carrier promises a lifetime income stream. Like IRAs, annuity withdrawals before the person is at least age 59 ½ result in a 10% penalty. Taxes are paid when the interest earned is withdrawn. These insurance products don’t have a direct downside market risk due to market fluctuations as they are guaranteed by the company that issues them. Since they have a competitive interest rate they have been a favorite of informed financial minded individuals to accumulate and protect wealth. Traditional Fixed Annuities have been helping from all walks of life prepare for a secure retirement. With their combination of tax-deferred accumulation, minimum interest rate guarantees, and lifetime income options, fixed annuities have long been an important - and most would agree conservative - component of many American's financial portfolios.
There are Two Phases with any Annuity product: 1. Accumulation Phase – Money In 2. Distribution Phase – Money Out
A Few Basic Types Include:
Flexible Premium Deferred (FPDA) – allows the policy owner to determine the amount and frequency of premium payments
Single Premium Deferred (SPDA) – only one premium payment allowed
Single Premium Immediate (SPIA) – provides income soon after the premium payment is made. If the annuity is purchased with after-tax dollars, then a tax advantaged payout is provided.
Broadly speaking, an Immediate Annuity is an insurance product which, for a single sum of money, provides a guaranteed income for life or a period of years. A Deferred Annuity is an insurance product which, (usually) for a single sum of money, accumulates on a Tax Deferred basis for a period of time and may be used at a future date to provide a guaranteed income for life or a period of years. It is important to realize that deferred annuities generally have limited liquidity for a period of time and may be subject to withdrawal or surrender charges. When you purchase any annuity contract, you should read your contract and any related certificate of disclosure carefully. It is also important to distinguish between guaranteed and non-guaranteed rates and other assumptions when evaluating various annuity products.
Fixed Annuities provide…
Preservation of Principal – SAFETY First!
Guaranteed rates of return
Long-Term Planning Products
Lifetime Income Stream
Provide the Same Benefits of a Fixed Annuity but with More Upside Potential
Eliminate the Downside Risk
Protect the Accumulated Value within the Account
Provide a Guaranteed Minimum Rate of Return
Tracks a specific market index
When the index is positive / market gains value
A percentage of the gain is credited to client’s Account
Adjusted by “Participation Rates” / “Caps” / “Fees”
When the index is negative / market loses value
NO losses deducted from client’s Account – Account stays even
Once you’ve earned it, you can’t lose it!
Fixed Indexed Annuities are a unique type of Fixed Annuity which may offer you the same benefits, features, and guarantees of traditional Fixed Annuities, plus the potential for the competitive interest crediting. This unique type are probably best described as Fixed Annuities with an interest crediting option linked to an outside index. Fixed Indexed Annuities combine the features of a Fixed Annuity — including tax-deferred accumulation, a guaranteed minimum value, and guaranteed income at retirement — with an interest crediting option that generally gives contractholders a very competitive rate of return over the long term, particularly when the market indices are increasing in value. This interest crediting is called an Indexed Strategy, and it links the amount of interest credited to the annuity to the performance of a specific index; for example, the Standard & Poor’s 500® Stock Index (S&P 500®). Fixed Indexed Annuities give contractholders a choice. Depending on their needs and personal tolerance for risk, contract holders can select a traditional “declared” rate of interest, or they can select one or more indexed strategies, or both.
Qualified vs. Non Qualified Annuity
Tax wise, what is the difference between a qualified and non-qualified annuity?
All distributions from a qualified annuity are taxed, but not all from a non-qualified are. The premiums paid into non-qualified annuities are not deductible. Therefore, distributions that are a return of principal are not taxed, only the interest earned is. Premiums paid for qualified annuities are deductible so all distributions from them are taxable.
If you would like more information to discuss your various options and/or to get an annuity quote, please contact us using the form below.
Acquire Financial Solutions, LLC 439 Columbia Ave W, Battle Creek, MI 49015
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