OPEN AN ANNUITY ACCOUNT
type of annuity are you interested in:
Rate Deferred Annuities
Low-risk, long-term investment
• Tax deferred earnings for compounded growth
• Principal guaranteed by the insurance company*
Potential higher returns based on stock market index
• Tax deferred earnings for compounded growth
• Principal guaranteed by the insurance company*
Rate Immediate Annuities
Secure, monthly income for your retirement
• Choice of payout terms, including income for life
• Steady, guaranteed interest rate
Guarantee based on the claims-paying ability of the issuing
annuity can be a solid part of your financial plan, whether
you’re a high-risk or a conservative investor. Annuities
can help you build a comfortable, secure retirement, or provide
you with an immediate, guaranteed source of income for as
long as you wish. They can protect you from unexpected drops
in the stock market and guarantee that your interest rate
never falls below a certain minimum.
annuity is a contract between you, an annuity owner and an
insurance company. They can be purchased with a single lump
sum or receive regular contributions over time. Your lump
sum payment can be made from existing savings, IRA funds,
an inheritance or a 401(k). Unlike other investment alternatives
such as certificate of deposits (CD), you can usually withdraw
some percentage of your annuity fund every year without paying
a surrender penalty. This is called a penalty-free withdrawal
and guidelines vary depending upon the plan you choose.
Annuities are an ideal way to create a retirement dream fund,
a secure foundation for your future. A Deferred Annuity enables
you to accumulate tax-deferred interest over time. Though
you pay tax on the interest when its withdrawn, there are
different ways to calculate your interest depending upon the
type of Deferred Annuity you buy. You control when and how
to withdraw your money.
flexible-premium equity-indexed annuity – the way to
know Social Security and pension plans alone will probably
not generate enough income to beat the rising cost of living
in your retirement years. The key to beating inflation and
generating the income you’ll need is long-term, diversified
financial planning. And harnessing the power of higher interest
rates linked, in part, to increases in the Standard &
Poor’s 500 Composite Price Index (S&P 500 Index).
Since 1975 the S&P 500 Index has averaged an annual increase
of more than 11%* - outpacing the rate of inflation.
annuity helps you build a more secure financial future by
combining the safety and guarantees of an annuity with the
upside potential of earning interest rates linked to a portion
of the increases in the S&P 500 Index. Typically, 90%
of your premium (accumulated at 3% interest) is guaranteed,
though it varies among plans. Some plans have a maximum interest
rate, but the amount of additional interest you earn can range
from 0 to 100%, depending upon the stock market index and
your annuity’s crediting period.
they contain more risk, Equity-indexed Annuities provide a
chance to earn higher interest rates than a Fixed-rate Annuity.
S&P 500 Index without dividends since 1/1/75 through 12/31/95.
Includes some years with negative returns.
Annuities are a low-risk product. They offer an initial interest
rate for a specified period of time, usually ranging from
one to ten years. After that time, you earn interest at a
rate determined by the company, though that rate is guaranteed
to never fall below the minimum (usually 3 to 4%) stated in
your contract. The company may declare the adjusted rate for
one year, or longer for plans with a Market Value Adjustment.
Annuities generally guarantee return of your principal. They
provide an initial guaranteed interest rate and minimum guarantee
thereafter. Renewal rates have historically exceeded the minimum
interest stated in policies.
variable annuity is a type of annuity in which you decide
how your money will be invested. You can invest your annuity
funds in a number of investment types, such as bond funds,
money market funds, stock funds or guaranteed interest accounts,
and you can transfer money between funds, tax-free. The rate
of return on your variable annuity depends on the investments
you choose, and your funds are subject to the same risks as
any other stock market investments. However, your variable
annuity does offer the advantage of tax-deferred earnings
and there is a death benefit feature that guarantees the amount
of your contributions will be paid to your beneficiaries,
should you die before you begin to withdraw money from your
variable annuities tend to be higher risk, they are more often
used to accumulate funds for retirement, although they can
be purchased as an immediate annuity and used for the payout
phase. In that case, the payout will depend on the return
of the investment and can vary from month to month.
with any financial decision, choosing an annuity means making
tradeoffs. For example, the fixed-rate deferred annuity that
offers the highest interest rate may only credit that rate
for one year. However, an annuity with a lower initial interest
rate may credit it for ten years. Interest rates, length of
any guarantee period, and other features often widely vary.
Each deferred fixed-rate annuity offers you a different set
of terms, so you are likely to find a plan to meet your personal
needs. When shopping for an annuity, Questions to Ask Before
What will the interest rate be?
initial interest rate is the rate your money earns from the
day the insurance company receives your first premium until
the end of a specified period, which varies by contract. The
initial interest rate period is, not surprisingly, the length
of time during which you will earn the initial interest rate.
plans to find the right balance of factors for your needs.
You might want a plan with a higher initial interest rate,
even if you will earn that rate for a shorter period of time.
Perhaps you prefer a plan with a longer initial interest rate
period, even if it pays a lower initial interest rate. You
may want to take a slightly lower initial interest rate in
order to have a lower surrender penalty. The more lenient
surrender penalties, the greater flexibility you will have
to withdraw funds. Your individual situation and personal
retirement goals will determine the relative value of these
Do I want to contribute qualified or non-qualified funds to
funds are funds on which you have not yet paid income tax.
For example, a traditional Individual Retirement Account (IRA)
is purchased with qualified funds. Other funds, such as contributions
to a 401(k) plan and pension or profit sharing plans, are
also qualified funds.
you are just starting a traditional IRA, you may want to think
about using a qualified flexible premium deferred annuity.
If you are dissatisfied with your current IRA, it’s
easy to roll over your existing IRA funds into a new qualified
you change employers, don’t pay tax penalties by cashing
in your 401(k) or other pension benefits; Put those funds
into a qualified deferred annuity of your choice.
funds are funds that have already been taxed, such as regular
wages or salary. The amount of qualified funds you can save
each year is limited, but the amount you can contribute to
non-qualified annuities is unlimited.
achieve your retirement dreams, consider establishing a non-qualified
How much do I want to contribute to the annuity?
amount you contribute depends on two main factors:
How much money you can put in, both now and in the future.
2. How much money you ultimately want to take out.
put money into a deferred annuity that you do not expect to
need until you retire, barring a major emergency. Remember
that there will be taxes and possibly other penalties for
early withdrawal (before you are 59+). Obviously, the more
money you put in, the more you will get out. Only you can
determine how much you want to save today in order to fulfill
your dreams in the future.
How frequently do I want to contribute to the annuity?
have two options for contributing premiums to your annuity:
single premium or flexible premium.
Premium means that you establish your annuity contract with
one contribution (called a premium). You cannot make additional
contributions to that annuity, but you can purchase additional
Premium means that you can contribute additional premiums
after your initial premium. As long as you contribute at least
the minimum amount defined in your contract, you can usually
make these contributions at any time for any amount. The flexible
premium may be ideal if you want to make regular additions
to your contract, much like adding to a savings account.
When do I want my benefits to start?
benefit payments can start on just about any date within twelve
months of the date you purchase your annuity. Normally, the
insurance company needs at least four weeks to process your
application and set up the benefit payments. When you buy
a deferred annuity, you put off – defer – your
benefits until a future date of your choice.
may want to put off receiving benefits until you are in a
lower tax bracket – perhaps after retirement. At this
time, you can cash out your annuity for a lump sum, and use
some or all of this amount to ensure that you have an income
for life, by buying an immediate annuity. To avoid paying
tax on the funds you use to buy an immediate annuity, you
need to do a Section 1035 (a) Exchange. Please call a licensed
financial advisor for assistance. You may also annuitize your
deferred annuity with your existing insurance company (convert
it into an immediate annuity).
note: Qualified annuities require you to start taking the
minimum required distribution from your annuity by April of
the calendar year following the one that you reach age 70+,
or the calendar year in which you retire, whichever date is
How frequently do I want to receive my benefit check?
can receive your benefit checks once a month, once a quarter,
twice a year or once a year. Most people decide to receive
their benefit checks once a month, provided that the amount
of the check they will receive exceeds the minimum payout
level established by the insurance company. The usual minimum
is $100. The benefit payment can be made by check, and be
payable to whomever the owner has designated. If desired,
the benefit checks can also be deposited directly into a bank
What if I want to take my money out before the end of the
surrender penalty period?
plans allow a penalty-free withdrawal of up to 10% of the
premium or annuity’s value, once a year. There is no
surrender penalty on these withdrawals. However, if you want
to take out more than the penalty-free withdrawal amount or
more than one withdrawal in a given year, you may be subject
to a surrender penalty. The surrender penalty period is the
length of time during which surrender penalties are charged.
penalties or fees the insurance company charges on surrender
during the penalty period are usually a percentage of the
amount you withdraw in excess of the penalty-free withdrawal
amount. Terms for these penalties widely vary from plan to
plan. You could also be liable for taxes and a 10% tax penalty
that the IRS imposes on funds withdrawn before you are 59+.
certain situations, surrender penalties may be waived.
Do I want to receive benefits for life?
immediate annuities have a period certain or guaranteed-payment
period, which is a specific length of time during which benefit
payments will be made. While you can choose a guaranteed period
for your plan, most annuities are paid for the lifetime of
the annuitant. Unless the owner provides for guaranteed payments
for a certain period by adding a “period certain”
clause to the life-only annuity, payments stop when the annuitant
What benefits do I want paid to my spouse if I die first?
a lifetime annuity on only one annuitant generates the highest
regular benefit payment, most married couples want the annuity
payments to the surviving spouse to continue after the first
death. In order to do this, they name themselves joint annuitants.
After one of the annuitants dies, the annuity benefits can
continue at the same level or at a reduced level to the surviving
establishing the annuity, some owners stipulate that the benefits
decrease by a certain percentage after the first death. This
increases the benefit while both are alive and recognizes
that one can live more cheaply than two. For example, instead
of a level $1,000 per month while one or both annuitants are
alive, they can possibly receive $1,200 per month while both
are alive and $700 per month, thereafter.
When does the contract end?
deferred annuity contracts have no predetermined end. They
continue until you decide to begin withdrawing funds. Some
annuities, however, specify a maturity date, such as age 85
or 90. Your money, along with the interest you have earned
through triple compounding, continues to grow until you decide
to take it out, or until the contract matures; at which time
you have several options.
may choose to cash out the entire annuity at once. This is
called surrendering the annuity. Or you can set up regular
benefit payments for whatever period of time you wish. This
is called annuitizing the annuity. You may also arrange for
another person to receive the annuity proceeds after you die.
regulations for qualified plans dictate that you start receiving
a minimum distribution by April of the calendar year following
the one that you reach age 70+, or the calendar year in which
you retire, whichever date is later.
a Deferred Annuity Right for you?
you are considering a Deferred Annuity Investment, ask yourself
Are you employed and accumulating money to meet your long-term
• Are you leaving, or planning to leave your job, and
looking for a tax-deferred plan to which you can roll over
your 401(k) or other profit sharing funds?
• Do you have at least five years to let your money
grow before you need to withdraw it?
• Do you have at least $2,000 available in any account
including savings, an IRA or a KEOGH?
• Do you understand the risk level involved with buying
each type of annuity? Are you comfortable with those risks?
• Do you want to put off paying income tax on your interest
earnings for as long as possible?
• Have you contributed all you can to qualified retirement
plans, such as your 401(k)?
you answered “yes” to most of these questions,
consider purchasing a deferred annuity.
does a deferred annuity work?
pay one or more premiums to an insurance company. Your premiums
earn interest, which can be calculated in several ways, depending
on the plan you choose. A contract that only allows on premium
is called a Single Premium Deferred Annuity. A Flexible Premium
Deferred Annuity allows you to pay additional premiums at
a later date.
100% of your premium is placed in an account and earns interest.
Unlike many mutual funds there are usually no initial fees
deducted from your contribution.
can withdraw the funds from your account whenever you want
in one or more lump sums. Withdrawals may be subject to surrender
penalties (usually in the first five to ten years). Withdrawals
before age 59 ½ are usually subject to an additional
10% tax penalty.
is the difference between the “annuitant” and
the “owner” of a deferred annuitant contract?
owner purchases the annuity and designates the annuitant.
The owner has authority over the contract and is responsible
for any taxes due on withdrawals.
annuitant is the person upon whose life the annuity is based.
the annuity was purchased with qualified funds, the annuitant
must also be the owner. Under a qualified annuity, if the
annuitant (also the owner) dies, the death benefit is payable
to the beneficiary.
the annuity was purchased with non-qualified funds, the annuitant
does not have to be the owner. Under a non-qualified annuity,
if the annuitant dies, and there is a contingent annuitant,
then the contract usually continues. Under many contracts,
if the annuitant dies and there is no contingent annuitant,
the death benefit is payable to the beneficiary. On some contracts,
where the death benefit is only payable on death of the owner,
the contract will continue with a new annuitant as determined
according to the contract.
is the difference between a single premium and a flexible
premium deferred annuity?
premium” means that one premium contribution is used
to purchase the annuity contract. If you want to make additional
premium contributions, you need to purchase a new contract,
as you cannot add them to your existing policy.
premium” contracts allow you to make additional contributions
to the existing contract. Depending on the contract, additional
contributions may be as low as $50.
can usually make these contributions at any time and for any
amount, subject to a minimum amount defined in your contract.
The flexible premium choice may be ideal if you want to make
smaller, regular additions to your contract, much like adding
to a savings account.
I buy an annuity myself, and then decide that I want someone
else (may be my new spouse0 to become the co-owner, can I
split the ownership after the annuity has already been established?
a qualified plan, you have to be the owner and annuitant,
and cannot have a co-owner. On a non-qualified plan, you can
change the ownership but this may have tax consequences if
the new co-owner is someone other than your spouse.
the difference between the initial interest rate and the initial
interest rate period?
initial interest rate is the rate at which your premiums will
earn interest. The initial interest rate period is the length
of time during which you will earn that rate.
What does “contingent bonus
bonus rate refers to additional interest you may earn if you
meet certain conditions. For example, if you continue your
annuity contract for a stated length of time and then begin
to withdraw your money in regular annuity payments, a higher
bonus interest rate may apply. Be sure you know which interest
rate applies in which situation, when you compare fixed-rate
is a “bail-out” rate?
bail-out rate protects you if you are concerned that the company
will declare a lower interest rate after the initial interest
rate period is over. A policy with a bail-out rate enables
you to “bail-out” of the contract without surrender
penalties if the declared interest rate is less than the initial
interest rate by more than a specified amount.
you own a deferred fixed-rate annuity, your account will earn
the initial interest rate for a specific period of time and
then earn the interest rate declared by the company. The declared
rate cannot be less than the minimum guaranteed in your contract
example, suppose that your initial rate is 5.4% and the bail-out
rate is 4.4%. If the company lowers the interest rate below
4.4%, you can bailout. That is, you can cash out your annuity
without paying the surrender penalty. This opportunity is
usually limited to a 30-day period after you are advised of
the new rate.
a liquidity feature?
it sounds like a way to tell whether your Jell-O is ready
to eat, a liquidity feature is actually a way in which you
can take cash out of the annuity. Liquidity features might
include full surrender, death benefit, partial or systematic
withdrawal, and loans. A full surrender or partial withdrawal
may trigger surrender penalties during the surrender penalty
period. Even during the surrender penalty period, many deferred
annuities allow you to make a partial withdrawal each year
up to the penalty-free withdrawal amount without any penalty.
In some situations such as death, terminal illness, confinement
to nursing home, and so forth, the company may waive the surrender
I am ready to withdraw my funds, can I get back all my money
can cash out your deferred annuity for a lump sum cash payment,
but you may be subject to a surrender penalty for early withdrawal.
You may, in addition, be subject to a tax penalty if you are
less than age 59 ½.
can also make occasional withdrawals or systematic withdrawals.
If you wish, you can convert it into an immediate annuity
and receive a stream of benefit payments.
do surrender penalties work?
hundred percent of your premium is usually credited to your
account when you pay your premium, despite the fact that the
insurance company has incurred costs in putting your contract
in force. The company recovers these costs over time. The
insurance company will usually charge you a surrender penalty
before these costs are recovered, if you cash out your contract.
the surrender penalty period, which usually lasts between
five and ten years, you can usually withdraw some portion
of your money without paying any surrender penalty. The penalty-free
withdrawal amount depends on the contract, but may be up to
10% of the account value each year. If you want to withdraw
more than the penalty free withdrawal amount, you will usually
incur a surrender penalty.
is a penalty-free withdrawal privilege?
the surrender penalty period, you are often allowed to withdraw
a certain amount of money every year without paying a penalty.
The right to make this withdrawal is called the “penalty-free
specific amount of the penalty-free withdrawal amount will
vary from plan to plan. However, be aware that while the contract
may not penalize you, the IRS may, unless you are over age
are surrender penalties waived?
on the contract you purchase, there might be circumstances
in which surrender penalties might be waived.
Some contracts may have a “bail-out rate” which
assures you that if the interest rate credited on your annuity
falls below a certain (usually predetermined) rate, you can
cash out your contract without any surrender penalties. Normally,
surrender penalties will only be waived for a limited period,
such as 30 days.
• If you are confined to a nursing home or become terminally
ill, some contracts will waive surrender penalties.
• You may also be able to annuitize (i.e., convert)
your policy into a payout (i.e., immediate annuity) without
incurring any surrender charges. The payout option available
will usually be limited so that payments will continue for
a minimum of five years.
that contractual surrender penalties have nothing to do with
IRS penalties. The government still wants you to wait until
you are 59 ½ to make any withdrawals.
do I convert my deferred annuity into an immediate annuity?
can annuitize your deferred annuity with your existing insurance
company (convert it into an immediate, or payout annuity).
can also surrender your annuity for a lump sum, and use some
or this entire sum to ensure that you have an income for life
by buying an immediate annuity. To avoid paying tax on the
lump sum used to buy the immediate annuity you could do a
partial withdrawal leaving behind in the deferred annuity
the required lump sum to make the immediate annuity purchase
via a Section 1035(a) exchange.
a Section 1035(a) exchange you assign your deferred annuity
to the insurance company, who will issue your immediate annuity.
They then surrender the deferred annuity and use the surrender
value they receive as the immediate annuity premium. PaulBalep
representatives would be glad to help you through the details.
is the difference between qualified and non-qualified funds?
terms refer to the tax status of your premium contributions.
qualified contributions are usually deducted from your taxable
income in the year your contribution is made to an IRA, 401(k)
or similar tax-qualified retirement savings plan. Therefore,
no income tax has been paid on these premiums. You can establish
a deferred annuity for your Individual Retirement Account
(IRA). You can also establish a qualified annuity by rolling
over your existing qualified plan, such as an Individual Retirement
Account (IRA), into a qualified annuity. You should consider
this option if you change employers and have money in a 401(k)
or other pension plan.
contributions come from the money you have paid income tax
on, such as your savings, regular wages, salary, etc. Essentially,
any money that isn’t qualified is non-qualified.
is an “exchange”?
(referred to as “Section 1035 (a) tax-free exchanges”)
are tax deferred transfers of non-qualified funds.
may transfer funds from a deferred annuity into another deferred
or an immediate annuity. You can also transfer funds from
a life insurance policy to a deferred or an immediate annuity.
In effect, you defer tax by transferring the tax basis from
the old contract to the new contract (i.e., a taxable gain
of $1,000 becomes a taxable gain of $1,000 in the new contract.)
is a “roll-over”?
are IRS-approved methods of transferring money, on a tax-deferred
basis, from an existing account 9or accounts) into another
are tax deferred transfers of qualified funds. For example,
you might transfer one or more of your bank IRAs into an IRA-qualified
annuity. Taxes are not paid in the year of transfer. Instead,
the funds continue to grow on a tax deferred basis until such
time as they are withdrawn. You can take up to a maximum of
60 days to reinvest qualified funds appropriately, although
this is not generally recommended. If you take constructive
receipt of the funds, there is a 20% withholding tax.
IRS limits this type of rollover to no more than one per contract
per year. As a rule, roll-overs of qualified funds are most
safely effected by “Trustee to Trustee transfers,”
in which the current plan makes the check payable directly
to the new plan.
does “grandfathering” mean?
means that a contract is treated according to an earlier set
of regulations, even though a new set of regulations has subsequently
regard to annuities, “grandfathering” means that
if you bought an annuity before certain tax laws were passed,
you might be able to retain some of the tax benefits of the
old contract – even when the annuity is exchanged for
a new contract.
you bought an annuity before 1982 and think that this possibility
might apply to you, please contact PaulBalep representative
and we will be glad to assist you.
are deferred annuity withdrawals taxed?
from qualified annuities, such as IRAs, are fully taxable
as ordinary income since your principal 9the premiums you
contribute) was excluded (i.e., deducted) from your taxable
income in the year your contribution was made.
non-qualified annuities, the interest, but not your principal,
is taxed when you withdraw it. Under current tax laws, you
are deemed to withdraw interest before principal. An exception
to this is premium paid before August 14, 1982 when principal
is assumed to be withdrawn before interest.
can I avoid paying taxes in the year of a roll-over or exchange?
avoid paying tax in the year of a transfer or exchange, be
careful to avoid taking “constructive receipt”
of the funds. You can do this by having the money sent directly
from the current financial instruction to the new insurance
company. The easiest way to do this is to assign the old policy
to the insurance company issuing your new policy. The new
insurance company will then surrender the policy for you and
add the proceeds to your new policy.
transfers may occur between different companies (referred
to as “external roll-overs” or “external
exchanges”) or between different annuities within the
same insurance company (“internal roll-overs”
or “internal exchanges”).
there any way to avoid paying taxes on the annuity funds altogether?
annuities are one of the few ways remaining to legally defer
taxes. However, like death, taxes are eventually unavoidable.
One day the gain in your non-qualified annuity, or funds in
your qualified annuity will be subject to income tax and possibly
estate tax. Unless you (or your beneficiary) are in a zero
tax bracket when you (or your beneficiary) receive the funds,
you will have to pay tax on the funds.
there any way that I could get into trouble with the tax authorities
because of my annuity?
long as you pay your taxes when they are due and disclose
all withdrawals, you should have no problems with the tax
calculating the amount of income tax that I would pay when
I withdraw all my money, how much money do I really save or
earn by buying an annuity?
many experts suggest deferred annuities for qualified Individual
Retirement Account (IRA) funds, there are no additional tax
benefits from a deferred annuity compared to other IRA vehicles.
With non-qualified funds, owning a deferred annuity should
mean that your money would grow faster.
example, if you invest $10,000 at 6% interest, in 30 years
you will have $57,435 in your annuity. If you then surrender
it and pay tax at 28%, you will have $44,153. This is $8,588
more than the $35,565 you would have if you paid tax at 28%
on the 6% interest accumulated each year, in for example,
a bank account. If after 30 years you are retired and in a
lower tax bracket, your gain will be even higher.
do I make sure that after I die, my annuity payments will
go to the person whom I want to receive them?
a qualified plan, if the owner dies, the death benefit goes
to the beneficiary. If the spouse is the beneficiary, the
contract may allow the spouse to request that the contract
continue, with the spouse as owner and annuitant.
a non-qualified plan, several situations can occur depending
on the particular plan.
If the annuitant dies and there is no contingent annuitant,
then the death benefit may be paid.
a co-owner dies, the contract continues unless the co-owner
was also the annuitant, and there is no contingent annuitant
in which case a death benefit may be payable.
the owner dies, with a spouse as a contingent owner, or with
a non-spouse contingent owner, the contract continues under
the one/five rule, unless the owner was also the annuitant
and there is no contingent annuitant in which case a death
benefit may be payable.
the death benefit subject to income tax?
The beneficiary will have to include part or all of the death
benefit payment in his/her taxable income. If the deferred
annuity was bought with qualified funds, then all of the benefit
payment will be taxable. Otherwise, only part of the payment
(i.e., the interest portion) will be taxable.
do I apply for an annuity?
contact a PaulBalep representative toll-free 1-800-964-8614
to discuss an annuity options. Once you’ve decided on
your plan, and have a PaulBalep representative answers any
questions you may have, then he/she will help you complete
there a minimum or maximum amount I have to contribute in
order to establish the annuity?
premium limits vary by company, the minimum initial contribution
for a deferred annuity may be as low as $1,000 for qualified
funds and $2,000 for non-qualified funds. The maximum range
in any one policy is usually between $250,000 and $1 million.
I buy an annuity as a gift for someone else?
You can buy a non-qualified annuity, but not a qualified annuity.
An annuity is a thoughtful and generous gift, because it demonstrates
your concern for the recipient’s long-term security.
An annuity may not be as pretty as flowers, but it certainly
lasts a lot longer! As with any gift, remember to consider
possible gift tax implications.
there an age limit for buying annuities? Might I be too young
or too old to buy one?
most cases, the maximum age for buying a qualified annuity
is 85 years; for non-qualified annuities, the maximum is 90
years. Maximum age limits vary by company. We will only present
you with plans for which you are eligible.
there is no minimum age for buying a non-qualified annuity.
There is usually no age minimum for qualified annuities, either,
although the owner must have taxable income that is equal
to or more than the IRA contribution.
if I move to a state where my annuity plan is not offered?
can keep your annuity plan in force. The regulations of the
state where you purchased the annuity will continue to govern
the annuity. However, any state income tax that may become
due on later withdrawals will be paid to your new state of
an annual contract fee? Do most companies charge this fee,
or is it unusual?
companies need to cover the costs of administering your policy
and also make a reasonable amount of profit. They do this
by earning more interest by investing your account value than
they credit you on your account value. A small number of contracts
may in addition cover some of the costs by charging you an
annual contract fee.
annual contract fee is not always a bad thing provided that
it means you earn a higher interest rate compared to a contract
with no annual contract fee.
For example, on a $10,000 account value paying a $25.00 annual
contract fee in advance and earning 5.26% per year is approximately
the same as earning 5% per year with no fee. In both cases,
you have $10,500 at the end of the year. If your account value
is $20,000, you earn more with 5.26% interest, and paying
the $25 fee compared to earning 5% with no fee (i.e., $1,026
as opposed to $1,000).
description of “return of principal (premium)”
makes me nervous. If I put my money into the annuity, don’t
I have the right to get it back?
you need to surrender a deferred annuity within a year or
two of buying it, the surrender penalty may exceed the interest
you’ve earned. In this case, you could receive back
less than your premium contribution, unless your contract
includes a return of premium guarantee. With a return of premium
guarantee, you will always get your money back from the insurance
company. Normally, you should not purchase a deferred annuity
unless you expect to keep your contract in force for at least
note that the precise coverage afforded is subject to the
terms, conditions, and exclusions of the policy as issued.
This explanation is intended only as a guideline. This information
is not intended to be considered investment, tax or legal
advice. It is provided, for your education only. This is not
an annuity contract. All terms and coverages are defined solely
by your policy.
more details, please call a PaulBalep representative toll-free
1-800-964-8614 to receive a free, no-obligation proposal.
Like so many satisfied clients, we think you’ll be happy
you did. And to set up a meeting to discuss additional insurance
and financial goals: Visit us online at www.paulbalep.com,
or e-mail us at firstname.lastname@example.org.
pays to shop around with PaulBalep. Your one stop shop
for insurance and financial services”
is number one>>. We are nonexclusive producers
who represent an average of eight companies-not just one.
PaulBalep can evaluate and compare the products of several
fine companies to find you the right combination of coverage