Frequently Asked Question…

It depends on the amount of invesment and bonus to the income base that carriers wil give. 

Your money is guaranteed by the issuing insurance company.  Its important to know the financial strength of the company that you purchase the annuity from.  It not guaranteed by the FDIC.

An income rider is added to a fixed index annuity at its purchase.  They will guarantee a lifetime income similar to a pension. There is a fee associated with these riders. 

It depends on the surrender years of the annuity.  Depending on the product and company it can be from 3-14 years.  The longer the surrender period, the better chance of making higher gains.  With some annuities like a SPIA, this doesn’t come into play. We are generally thinking surrender years when we refer to MYGA’s and FID’s.

You may draw money from an annuity depending on the company. Most of these withdrawals are limited to 10% per year.  Anything more than that usually has a graded surrender charge that adjusts for year it is withdrawn.

Most annuities will pay your beneficiaries the account value unless you have an income rider.  In that case, it will pay them for the remainder of their lives. 

Qualified plans have tax-deferred contributions from the employee, and the employer may deduct amounts they contribute to the plan. Non–qualified plans use after-tax dollars to fund the plan and, in most cases, the employer cannot claim their contributions as a tax deduction.

A 1035 exchange is a provision in the tax code which allows you, as a policyholder, to transfer funds from a life insurance, endowment or annuity to a new policy, without having to pay taxes.

If you purchase your annuity with non-qualified funds and leave your interest earnings inside the contract to grow and compound, making no withdrawals, then those interest earnings are tax-deferred. What that means is that you do not have to pay income tax on the interest earnings until you choose to withdraw them.

A state guaranty fund is administered by a U.S. state to protect policyholders in the event that an insurance company defaults on benefit payments or becomes insolvent. The fund only protects beneficiaries of insurance companies that are licensed to sell insurance products in that state.