Annuity Basics

Annuities are insurance products and many are both insurance products and securities. They are contracts typically offered by insurance companies where you invest a certain sum of money and the insurance company promises to pay you back plus a return on your investment over time, subject to the terms of the contract and market changes. The terms may provide for payments for the rest of your life even if your account balance becomes zero. Annuities can also include a death benefit to designate to beneficiaries. Certain annuities, if properly matched to your situation, can be fantastic investments to include in your retirement portfolio because they can offer tax deferred earnings, asset protection, and payments to you for the rest of your life!

There are many types of annuities but they are typically categorized as fixed, fixed indexed, variable, or RILA (Registered Index Linked Annuity). They may be immediate or deferred annuities. There are over a thousand different annuity products offered by over 50 insurance carriers. They are complex products that can be customized by adding features (i.e. riders), selecting allocation methods, and in other ways. There are three particular features that certain annuities offer that make them investments that require consideration when in, or preparing for, retirement:

1. Tax Deferred Savings

401(k)’s and IRA’s have limits on the amount that can be invested in any one year to benefit from tax deferred earnings. But annuities have no limit allowing for greater tax deferred savings.

2. Asset Protection

One of the best features of certain annuities is asset protection provided in two ways:

1. Protection from market declines.
2. Protection from creditors.

3. Income for Life

Annuities are the only insurance product that can provide Income for the rest of your life. No matter how long you live, even when your account value is zero, payments to you continue.

We would like to have the opportunity to speak or meet with you to learn your needs and to help you select the annuity that provides the best fit for you.

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