Supercharge your retirement income
An annuity may be the right choice to drive tax efficiencies with a portion of your assets.
Supercharge your retirement income
An annuity may be the right choice to drive tax efficiencies with a portion of your assets.
Benefits of an Annuity
Retirement income you can rely on
Many people are living longer, healthier lives, so reliable income that lasts is essential to any retirement. Annuities offer a variety of add-on benefits that can provide lifetime income to meet the challenges of longevity ahead.
Making your money last for generations
Sometimes there’s more to retirement than living a good life. With add-on benefits that help preserve and grow assets in an annuity, planning for future generations has never been easier. And once it’s time to pass on your legacy, it can go directly to your beneficiaries, tax-deferred.
Growth potential for your retirement assets
The market can be intimidating for investors, but it can also be a powerful tool for growing your assets. Annuities that offer market access can provide opportunities for growth through a variety of investment options. Some annuities even offer protections against market ups and downs like step up features and market linked bonuses.
Encourage asset growth through tax deferral
One of the great advantages of annuities is they defer your taxes on interest and investment earnings until you take income from them. This means you get to keep more of what you’ve earned to invest in your future retirement.
Explore your annuity options
Offering guidance in your annuity customization
Selecting the right chassis
The annuity chassis is the foundational structure of a contract, defining its type, term length, payouts, and withdrawals. This framework allows riders to tailor benefits such as income guarantees, inflation protection, or long-term care coverage to meet financial goals.
Picking your optional add-on’s
Variable annuity riders are optional add-ons buyers can select, typically for an additional cost, to enhance annuity contracts. These riders provide benefits like income guarantees, death benefits, or market protection, tailoring the annuity to meet financial goals.
Choosing a settlement option
Settlement options are payout choices for annuities or life insurance, offering flexibility in disbursing funds. Common options include lump sums, fixed periods, lifetime income, or joint-life payments, each with benefits tailored to suit the client’s desired results
Powering growth with sub accounts
Sub-accounts in a variable annuity drive growth through professionally managed options. Their performance impacts the annuity's value, providing market-based growth opportunities. Policyholders can select options that match their goals, maximizing returns.
Learn how to enhance your variable annuity
Variable annuity (VA) add-ons, also known as riders, are optional features that enhance and personalize an annuity to meet a client’s unique financial goals and preferences. These riders offer flexibility by providing additional benefits beyond the annuity's core features, enabling clients to address specific concerns like income security, market volatility, or long-term care needs.
For example, a Guaranteed Lifetime Withdrawal Benefit (GLWB) rider ensures a steady income stream for life, regardless of market performance, while a Market Protection Rider offers safeguards against downturns. Enhanced Death Benefit riders protect beneficiaries by increasing payouts, and Long-Term Care Riders provide financial support for health-related costs.
By combining multiple add-ons, clients can create a comprehensive retirement plan that balances growth, protection, and flexibility. These tailored options empower clients to adapt their annuities to their evolving financial situations, providing peace of mind and aligning with their specific wishes.
Guaranteed Lifetime Withdrawal Benefit
The Guaranteed Lifetime Withdrawal Benefit (GLWB) is an optional rider available with annuities that ensures policyholders receive a guaranteed income stream for life, regardless of the annuity's investment performance. This benefit allows withdrawals up to a specified percentage of the benefit base, which may grow through roll-ups or market performance, depending on the terms.
GLWB riders are ideal for those seeking retirement income security while maintaining control of their remaining account balance. They provide a balance of growth and protection, offering peace of mind against outliving retirement savings potential.
Enhanced Income Benefit
The Enhanced Income Benefit is an optional rider for annuities designed to increase income payouts under specific conditions, such as requiring long-term care or experiencing a qualifying health event. This benefit provides additional financial support during times of increased need, offering peace of mind and flexibility.
It allows policyholders to access higher payments without fully depleting their account value. While this rider typically comes with an extra cost, it can be a valuable addition for those concerned about health-related expenses or life changes in retirement. The Enhanced Income Benefit ensures added security when unexpected costs arise.
Guaranteed Minimum Income Benefit
The Guaranteed Minimum Income Benefit (GMIB) is a rider for variable annuities that ensures a baseline level of income, regardless of market performance. After a waiting period, typically 7-10 years, the rider guarantees minimum payouts based on a predetermined formula, even if the annuity’s account value declines due to poor market performance.
This benefit provides retirees with the security of knowing they will receive a stable income stream, regardless of investment results. While the GMIB offers valuable protection, it often comes at an additional cost. It’s ideal for those prioritizing income stability in retirement planning.
Guaranteed Minimum Accumulation Benefit
The Guaranteed Minimum Accumulation Benefit (GMAB) is an optional rider for variable annuities that guarantees the policyholder will receive at least a specified minimum account value after a set period, typically 7-10 years, regardless of market performance. If the actual account value is lower than the guaranteed amount at the end of the term, the insurance company makes up the difference.
This rider protects against market downturns while allowing for growth potential. While GMAB offers valuable downside protection, it often comes with additional fees. It’s ideal for those seeking to safeguard their principal while benefiting from market-based investments.
Enhanced Death Benefit
The Enhanced Death Benefit is an optional rider for annuities that increases the payout to beneficiaries beyond the standard death benefit, providing added value and protection. This rider typically ensures the higher of the annuity’s current account value, total premiums paid, or a guaranteed minimum amount, often with annual roll-ups or step-ups to lock in market gains.
While valuable for those wanting to leave a larger legacy and available without underwriting approval, it comes with additional costs, requiring careful consideration to ensure it aligns with your financial goals.
LTC | Chronic Illness Rider
The LTC/Chronic Illness Rider is an optional annuity rider providing financial support if the policyholder requires long-term care or is diagnosed with a chronic illness. It allows access to a portion of the annuity's value to cover care-related expenses, offering flexibility and tax-advantaged benefits.
This rider can ease financial burdens but comes with extra costs and focuses specifically on long-term care expenses. In contrast, the Enhanced Income Benefit Rider increases income broadly to address a range of financial needs, not limited to healthcare costs, making it important to assess which aligns with your retirement goals.
Performance Driven Income Rider
The Performance-Driven Income Rider ties annuity income payouts to the performance of investment sub-accounts, providing stability and growth potential. It guarantees baseline income while offering increased payouts if investments perform well, allowing policyholders to benefit from market gains during the payout phase.
This rider balances protection and performance, appealing to those seeking predictable income with growth opportunities and adaptability to changing financial needs. While it adds cost, it enhances retirement income flexibility and aligns with long-term planning goals.
Understanding Annuities
Annuity basics
Annuities are financial products designed to provide a reliable income stream, often for retirement. Purchased through an insurance company with a single payment or periodic contributions, annuities grow tax-deferred, meaning earnings aren’t taxed until withdrawn.
There are three main types of annuities: fixed, offering guaranteed returns; variable, tied to market performance; and indexed, combining features of both. Payments can start immediately or be deferred, depending on your needs. The size and duration of payments depend on your contributions, chosen terms, and annuity type, with options like lifetime income or fixed-period payouts.
Modern annuities offer flexibility, allowing people to maintain control of their funds while accessing potential lifetime income or legacy benefits. These products adapt to changing circumstances, providing solutions tailored to evolving financial goals. While annuities provide stability and tax advantages, they may include withdrawal penalties or tax implications if accessed before age 59½.
How they work
Annuities are long-term financial products designed to provide a steady income stream, often for retirement. They begin when you pay premiums to an insurance company, either as a lump sum or through periodic payments. These contributions can grow tax-deferred, meaning earnings are not taxed until withdrawn.
The process is flexible, allowing you to choose when to start receiving payments—immediately or at a future date. Payment size depends on factors such as the accumulated value, the type of annuity (fixed, variable, or indexed), and the terms set in the contract. Payments can be structured to last for a specific period, the rest of your life, or include spousal or beneficiary options.
Annuities offer benefits like guaranteed income, but they come with early withdrawal charges and potential tax penalties for accessing funds before age 59½. Modern annuities may include add-ons like lifetime income guarantees or market protection, offering enhanced flexibility and security.
Is one right for you?
Annuities are financial products designed to provide guaranteed income and financial security, often for retirement. They grow tax-deferred and can be purchased through a lump sum or periodic payments.
- Are you in your working years? An annuity can help you build a portion of your assets to create a guaranteed income stream in retirement.
- Are you a high earner? An annuity offers tax-deferred growth, helping you expand your portfolio while managing taxes efficiently.
- Are you nearing retirement? An annuity can maximize returns in strong markets while protecting against losses, preserving your savings.
- Are you already retired? An annuity can protect your nest egg and provide lifetime income, or help ensure a legacy for loved ones without requiring life insurance underwriting.
Modern annuities provide flexibility, combining growth potential, income security, and legacy options to adapt to changing financial goals.
Fixed vs Indexed Annuities
When considering annuities, both fixed and indexed options offer unique benefits, making them suitable for different financial goals. Here’s how they compare:
Fixed Annuities
A fixed annuity provides a guaranteed interest rate for a set period, offering stability and predictable growth. The insurance company determines the rate, which remains constant regardless of market conditions.
- Guaranteed, steady growth.
- Ideal for conservative investors seeking predictable returns.
- Shielded from market volatility.
- Lower growth potential compared to market-linked options.
- Returns may not keep up with inflation over time.
Indexed Annuities
An indexed annuity ties its growth to the performance of a market index, such as the S&P 500, with limits on both gains (caps) and losses (floors). While you won’t lose money in a market downturn, gains are capped even in strong markets.
- Potential for higher returns than fixed annuities.
- Protection from market downturns.
- Growth linked to market performance without direct exposure.
- Returns are subject to caps and participation rates.
- Complex terms may require careful understanding.
A fixed annuity is a good choice for risk-averse individuals seeking steady, guaranteed growth. Indexed annuities suit those wanting market-linked growth potential without the risks of direct market exposure. Your choice depends on your financial goals, risk tolerance, and need for growth versus stability.
Indexed vs Variable Annuities
When comparing indexed and variable annuities, each offers unique benefits and risks, making them suitable for different financial goals.
Indexed Annuities
Indexed annuities link their growth to a market index, such as the S&P 500, while protecting against losses with a guaranteed minimum value. Gains are capped, and participation rates determine how much of the index’s growth you receive.
- Growth potential linked to market performance.
- Downside protection ensures no loss of principal in downturns.
- No direct exposure to market risks.
- Gains are limited by caps or participation rates.
- Growth potential may lag in strong markets.
- Terms can be complex and require understanding.
Variable Annuities
Variable annuities allow direct investment in sub-accounts similar to mutual funds, offering higher growth potential with no caps, but carrying market risk. The account value fluctuates based on investment performance.
- Unlimited growth potential tied to market performance.
- Diverse sub-account options for customization.
- Opportunity for greater returns over time.
- Principal is at risk due to market fluctuations.
- Higher fees compared to indexed annuities.
- No guaranteed minimum value in downturns.
Both annuity types offer opportunities for growth but differ in risk and structure. Indexed annuities focus on security with moderate growth, while variable annuities aim for higher returns with greater risk.
SPDA vs FPDA vs SPIA
When considering annuities, understanding the distinctions between Single Premium Deferred Annuities (SPDA), Flexible Premium Deferred Annuities (FPDA), and Single Premium Immediate Annuities (SPIA) is essential to choosing the right product for your needs.
Single Premium Deferred Annuity (SPDA)
An SPDA is purchased with a single, lump-sum payment and offers tax-deferred growth until the payout phase. It’s ideal for individuals with a large upfront amount to invest and who want to defer income.
- One-time premium payment.
- Growth is tax-deferred until withdrawals begin.
- Payouts start at a future date.
Flexible Premium Deferred Annuity (FPDA)
An FPDA allows multiple payments over time, offering flexibility for those who want to contribute gradually while still benefiting from tax-deferred growth.
- Multiple premium payments allowed.
- Tax-deferred growth.
- Payouts begin at a future date.
Single Premium Immediate Annuity (SPIA)
An SPIA is purchased with a single, lump-sum payment and starts generating income almost immediately, making it ideal for those seeking quick, guaranteed income.
- One-time premium payment.
- Income begins within a year.
- Provides guaranteed, predictable payments.
Key Differences
- SPDA: Single payment with income deferred to a future date.
- FPDA: Flexible contributions with income deferred to a future date.
- SPIA: Single payment with income starting almost immediately.
Each option serves different financial goals, from building savings over time to securing immediate income.
Is a variable annuity right for you?
A tax deferred - variable annuity can help grow your assets in the market and simultaneously protect your withdrawal value from taking losses. Tailored endorsements can do even more to give you guarantees and piece of mind.
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