We believe that financial education is a key aspect of financial strategizing. With this in mind, we believe it is important to provide information on topics relevant to your financial future. One such topic is annuities. Did you know that an annuity is a contract between you and an insurance company, under which you make a lump sum or series of payments? In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date, your choice. Annuities typically offer tax-deferred earning and may include a death benefit that will pay your beneficiary a guaranteed* minimum amount, such as your total purchase payments.

Unlike retirement plans, there is no limit to how much money you can put into an annuity. The number of annuity products on the market today can make selecting the most suitable annuity a confusing process, that’s where we come in.

Some Facts To Consider

• Timing of payout – immediate or deferred: In an immediate annuity, the annuitant (you) begins receiving payments immediately after purchase. This is for individuals who need immediate income from their annuity. In a deferred annuity, payments begin at some future date, usually at retirement.
• Investments by Insurers -
  • Fixed annuities: Insurance companies invest annuity assets in government securities and high-grade corporate bonds. They offer a guaranteed* rate, typically over a period of one to ten years.
  • Variable annuities: Provide you more control over where your premium goes, such as equity investments, fixed interest accounts, and money market securities.
• Liquidity Options – An annuity may allow you to withdraw either your interest earnings or up to 15% per year without a penalty, dependent on the annuity contract. However, its important withdrawal from an annuity may be subject to taxes and a 10% federal penalty if taken before age 59 1/2.

Types Of Annuities

• Fixed annuity: The insurance company guarantees that you will earn a minimum rate of interest during the accumulation phase of the annuity. Plus, it guarantees that the periodic payments will be a set amount. These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse. Fixed annuities are not securities and are not regulated by the SEC.
• Variable annuity: Provides purchasers more choice as to where their premium goes through a selection of sub-accounts.  The rate of return on your purchase payments, and the amount of the periodic payments you will eventually receive, vary depending on the performance of the sub-accounts you selected. Variable annuities are securities regulated by the SEC.

Key Takeaways

At the Noles Group, we believe annuities have an important place in many of our client’s financial plans. Here are a few things we consider.

• The rating of the insurance company, which indicating their financial strength, issuing the annuity, particularly in the case of a fixed annuity.
• Understand the fees you will pay.
• Understand that if you are considering a withdrawal from an annuity it may be subject to taxes and a 10% federal penalty if taken prior to 59 1/2 years of age.

*Fixed Annuities are insurance products and are designed for long-term retirement income.  Annuity guarantees are subject to the claims-paying ability of the insurance company. Additionally, if purchased within a qualified plan, an annuity will provide no further tax deferral features. The contract, when redeemed, may be worth more or less than the amount used to purchase the annuity.  Fixed annuities are contracts and you should read and understand the contract before making a purchasing decision.

Keep in mind that investing involves market risk and your investment return, principal value and periodic payments will fluctuate over time. You could end up with more or less than the amount you invested.  Investing always involves risk, including the potential loss principal. Variable Annuities may offer certain guarantees, these guarantees are subject to the claims paying ability of the issuing insurance company.

Variable Annuities are sold by prospectus. Both the product prospectus and underlying fund prospectuses can be obtained from the issuing insurance company or your financial advisor. Before investing, you should read the prospectus carefully and consider investment objectives, risks, charges and expenses. The product prospectus and underlying fund prospectus contain this and other important information.

FIXED ANNUITY DISCLOSURE:
Fixed Annuities are insurance products and are designed for long-term retirement income. Annuity guarantees are subject to the claims-paying ability of the insurance company. Surrender charges may apply if money is withdrawn before the end of the surrender period. All withdrawals of tax-deferred earnings are subject to current income tax, and, if made prior to age 59½, may also be subject to a 10% federal income tax penalty. Annuities generally contain fees and charges which include, but are not limited to, sales and surrender charges. Additionally, if purchased within a qualified plan, an annuity will provide no further tax deferral features. The contract, when redeemed, may be worth more or less than the amount used to purchase the annuity. Fixed annuities are contracts and you should read and understand the contract before making a purchasing decision.

All Guarantees are subject to the claims paying ability of the issuing insurance company.

Variable Annuities Disclosure:
Variable annuities are long-term investments suitable for retirement funding and are subject to market fluctuations and investment risk, including the possibility of loss of principal. Annuities generally contain fees and charges which include, but are not limited to, mortality and expense risk charges, sales and surrender charges, administrative fees, charges for optional benefits and riders, and annual contract fees. Annuity guarantees, including guarantees associated with benefit riders are subject to the claims-paying ability of the insurance company. Surrender charges may apply if money is withdrawn before the end of the contract. All withdrawals of tax-deferred earnings are subject to current income tax, and, if made prior to age 59½, may also be subject to a 10% federal income tax penalty. Additionally, if purchased within a qualified plan, an annuity will provide no further tax deferral features. The contract, when redeemed, may be worth more or less than the total amount invested. All other benefits are available for an additional cost. It is important to weigh the costs against the benefits when adding such options to an annuity contract.

Variable Annuities are sold by prospectus. Both the product prospectus and underlying fund prospectuses can be obtained from the issuing insurance company or your financial advisor. Before investing, you should read the prospectus carefully and consider investment objectives, risks, charges and expenses. The product prospectus and underlying fund prospectus contain this and other important information.