Why Annuities?

Annuity Basics

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Lifetime Income Options

The North American Guaranteed Income Advantage GMWB rider offers:

  • More Flexibility
  • One of the lowest costs


In today's Fixed Index Annuity Marketplace

What is an Annuity?

  • A long-term insurance product designed to grow assets and/or provide guaranteed income.
  • Accepts a single premium payment or a series of flexible payments.


Types of Annuities

  • Single Premium Immediate Annuities - SPIA
  • Turns a lump sum of money into a series of guaranteed payouts - usually beginning within one year.
  • These payments may be for life or a defined period.
  • Deferred Annuities
  • Designed to accumulate money until a chosen future date when income payments may begin.


Different Varieties of Annuities

  • Traditional Fixed
  • Indexed
  • Variable


Types of Annuities

  • Fixed Annuities
  • Guarantees an interest rate
  • May credit an interest rate higher than the guarantee


Traditional Fixed


  • Declared Current Interest Rate
  • Guaranteed Minimum rate of Return
  • Guaranteed Return of Principal
  • Insurance Company Bears Interest Rate Risk


Safety - Fixed Annuity

  • Principal is protected
  • Cannot lose principal due to 'market' losses
  • A minimum interest rate is guaranteed
  • If your client does need to terminate the whole contract during the surrender charge period, they know the exact percentage they will be charged - up-front.
  • Surrender charges are typically assessed over 5 - 15 year periods


Types of Annuities

  • Guaranteed Return of Premium
  • No Market Risk to Prior Earnings (most products)
  • Minimum Guaranteed Surrender Value
  • Regulated as an Insurance Product - Not a Security


Fixed Indexed Annuities


  • Fixed Annuity
  • All the benefits of a traditional annuity
  • Interest earnings based on the performance of a market index (e.g. S&P 500 Index®)
  • Multiple index crediting options available
  • Upside potential with no downside risk


Qualified vs. Non-Qualified Money

Annuities fall into two distinct taxable structures, those being qualified monies and non-qualified money. I like to think of qualified money as that type of money that is "qualified" by government rules. Some rules governing this type of money can be restrictive. Here are two of the most common restrictions.

  1. You may not access your money without penalty till the age of 59 ½ (your current income tax rate, plus a 10% penalty for early distribution.
  2. Your must use money before agent 70 ½ (RMD - required minimum distribution, unless it is a Roth.) The IRS and retirement plan documents will spell our all the rules for how and when you can access your contributions.


Non-qualified money is money that does not have IRS rules attached to them. Even though non-qualified money doesn't have government limitations imposed your account the insurance carrier may subject early withdrawal's to surrender charges. Non-qualified money may come from banking sources like CD's, money market accounts, inherited money or money in a savings or checking account. Annuities will require a similar limitation in accessing your money before age 59 ½.