Annuities are issued by life insurance companies to provide benefits during your lifetime. An annuity in the payout phase provides a guaranteed income that you can elect to have start either immediately after purchase or at a future date. You don’t have to pay federal income tax on accumulated earnings until payouts start. Withdrawals are taxable and, if you are under age 59-1/2, may be subject to a 10-percent tax penalty.
Payout, may be in one of several forms:
• Straight Life Annuity – You receive an income for the rest of your life. However, no payments are made to anyone, even your dependents, after your death. This is sometimes called a “pure” annuity. This type of annuity is often recommended for a person who needs the maximum amount of income and either has no dependents or has taken care of them through other means.
- Joint and Survivor Annuity: Payouts are made for as long as either you or your designated survivor lives.
- Installment Refund Annuity: Payouts are somewhat less than a straight life annuity, but they will at least equal the amount paid in premiums, regardless of when you die; any refund is paid to your beneficiary in installments.
- Life Annuity with Period Certain: Payouts are made to you for your life. However, this type of annuity features a “guarantee” provision. This means that if you die within a certain period after you start receiving income, usually 10 or 20 years, your beneficiary will receive regular payments for the balance of that period.
Annuities have many different features; there are a number of factors to examine before you buy. For example you should ask if there are charges for early withdrawals. Are there gradually decreasing withdrawal charges over a period of years?
Annuities provide an important retirement savings vehicle for many Americans. Generally, annuities are available as either variable or fixed contracts, and there are expenses and fees associated with the contracts.
A variable annuity is a long-term investment vehicle used for retirement savings. Assets allocated to your chosen investment divisions are subject to market risks and may fluctuate in value.
A fixed annuity is also used for retirement savings, but has no corresponding investment divisions. Funds in a fixed annuity contract are allocated to a fixed account with a competitive interest rate, and that money can accumulate over time, providing a nest egg from which you can withdraw. Some immediate fixed annuities can provide you with a guaranteed income stream, as well.
Please note that the guarantee associated with an annuity product is subject to the claims paying ability of the issuing insurance company. Review the prospectus carefully before you invest or send money.
Agent Licensed in NV and CA Ins Lic # 0G30574, New York Life Insurance Company and Registered Representative for NYLIFE Securities LLC (Member FINRA/SIPC), A Licensed Insurance Agency at 50 W. Liberty St, Ste 500, Reno, NV 89501 775.323.0751
To obtain a copy of the prospectus, please contact your NYLIFE Securities LLC Registered Representative, or call 1-800-598-2019. Investors are asked to consider the investment objectives, risks, charges and expenses of the investment carefully before investing. Both the product prospectus and the underlying fund prospectuses contain this and other information about the product and underlying investment options. Please read the prospectuses carefully before investing.
References:
- www.newyorklife.com/cda/0,3254,10468,00.html
- www.newyorklife.com/cda/0,3254,8951,00.html
- www.newyorklife.com/cda/0,3254,8952,00.html
