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Annuities can offer you safety, while helping you reach your financial goals.

Annuities offer you the following benefits:

  • You can earn a bonus on premium received in future years.
  • Each year, you may receive indexed interest based on monthly changes in the market index, subject to a monthly cap.
  • Any indexed interest is locked in once a year, eliminating risk due to market index losses.
  • Your premium and bonus are protected from index losses.

Annuities give you a variety of options to receive a steady, predictable income from your annuity:

  • Interest only – You have the option to receive interest-only annuity payments for a given number of years. Interest will be paid as earned, based on the amount of your annuitization value. After a given number of years of interest-only payments, you can take your full lump-sum payment.
  • Installments for a guaranteed period – You can choose to receive annuity payments in equal installments for a period from 10 to 30 years. Each installment would consist of part principal and part interest.
  • Installments for life – You have the option to receive annuity payments in equal installments for the rest of your life. Payments end upon your death.
  • Installments for life with a guaranteed period – You can choose to receive annuity payments in equal installments for the rest of your life. Upon your death, the balance of the guaranteed period, if any, will be paid to your beneficiary the same way as you previously selected.

How an Annuity works:

Life annuity is an important measurement especially after retirement. But you must plan ahead in order to enjoy the benefits it offers. So what is a life annuity and who needs one? In this article, you will come to know the basics about life annuity.

An Annuity is basically a retirement account which protects an individual against running short of income while they are still living. They are often referred to as Life Annuity or Lifetime Annuity because of this characteristic. This is quite the opposite of an insurance policy which pays upon the death of an individual.

It is a life insurance contract guaranteeing the purchaser, or his or her beneficiary, payment in the future, usually during retirement. Annuities may be structured in different ways with different payout options. Funds invested in an annuity grow on a tax deferred basis.

They are sold by insurance companies, brokers, and other financial institutions. You should consider an Annuity to secure your future income and lifestyle.

Annuities Offer Important Benefits:

  • Potential growth during the annuity’s accumulation phase
  • Income for life and other options
  • Tax deferral that can help your money grow
  • Death benefit protection

Bonus annuities may include annuitization requirements, lower caps, or other restrictions that are not included in similar annuities that don’t offer a premium bonus feature. To receive the annuitization value, the contract must be taken over a minimum of 10 years. If this requirement is not met, you will receive your contract’s cash surrender value. Receiving the cash surrender value will result in a loss of bonus, indexed interest, and a partial loss of principal. Any amounts withdrawn may be subject to ordinary income taxes and, if taken prior to age 59 1/2, to a 10% IRS penalty. These taxes and penalties may additionally reduce the amount you receive. Not available in all states or on all products. Avoidance of probate delays and costs may require a properly named beneficiary, other than the estate.

Disclaimer: The information found on this page is for informational purposes only and is subject to change without prior notice. Please Keller Insurance Agency for the most up to date information.

Common Types of Annuities:

  1. Fixed Annuity – It is quite similar to a Bank CD, it requires a lump sum or rollover of funds into a tax deferred annuity and pays a guaranteed percentage of interest and sum of money monthly.
  1. Variable Annuity – It works similar to a mutual fund with underlying stocks, bonds, cash etc. The value of the account rises or falls based on the performance of the underlying investments.
  2. Immediate Annuity – An income annuity in which the owner immediately begins receiving payments, normally requires a lump sum deposit. It can sometimes even include a death benefit.
  3. Deferred Annuity – It requires a lump sum deposit or regular investment deposits and benefit payments are received at a future date; it can be fixed or variable in nature.
  4. Equity Indexed Annuity – There is a possibility of greater returns through an aggressive investment mix and thus possibility for greater returns as well as greater loss of principal.

How Fast does a Structured Saving Plan Grow?

Because of the risk of decrease in principal value of the underlying investments annuities are considered to be securities and their sale and treatment are therefore governed by the Securities and Exchange Commission.

Things to know about Saving for Retirement:

  1. Start – some people believe it takes a lot of money to make a difference.
  2. Plan your lifestyle- determine the lifestyle you desire in retirement and structure your savings to match your goals.
  3. Save a percentage of your income when you retire you will be living on a % of your current earnings. Possibly 50-100% of your current income, multiplied by the yearly rate of inflation.
  4. Save a consistent amount in a structured savings account.
  5. Determine the possible unexpected costs associated with retirement and aging.