Annuities explained is a presentation which will explain everything you need to know about the major types of annuities, what are the best annuities and how to select the most appropriate annuity in your particular situation.
What is an annuity?
An annuity is an insurance-based contract between you, the owner, and the contract issuer.
This is basically how annuities work: You pay after-tax dollars to the issuer, the issuer invests the money for you, and any earnings accumulate tax deferred. At some point, the issuer pays out the principal and earnings to you or to your beneficiaries. Earnings are taxed as ordinary income when they’re distributed.
Annuity Basics is part of our continuing series of presentations for Financial Services Industry Training. We develop custom training specific to the financial services industry. Contact us for a quote or discussion of your needs.
Annuity is a term that is familiar to most of us and that we have been now hearing for over 200 years. Annuities are nothing but products offered by insurance companies that allow you to save on taxes and derive benefit on retirement. These accumulated funds are later repaid to you either for a fixed term, say 5 to 10 year, or for the rest part of your life.
Annuities are quite similar to Collateral deposits. CDs are offered by banks, similarly, insurance companies offer different return schemes on your annuity investments.
What is the meaning of annuity?
For a layman, an annuity is nothing but a contract between two parties, a person, also called as the insured and an organization which is nothing but an insurance company. The insurance company agrees to pay the insured an agreed upon benefit either in the form of regular interval payments or in lump sum.
Who offers an Annuity?
Annuities are presented by Insurance companies. They reach customers by the way of licensed agents. But before you chose to invest with the insurance company, you should check their insurance licenses. State and federal laws and insurance commissions govern the reserve funds, also known as State Legal Reserve Pools.
How does an Annuity Scheme work?
Annuity is a contract. The insured makes a deposit with the insurance company either in a single go or through regular small installments. Depending upon the type of annuity you choose, the money deposited with the insurance company will earn fixed or variable return.
Different Types of Annuity:
• Single premium immediate annuity: The amount is paid in lump sum and the benefits are derived from the immediate next month onwards.
• Single premium deferred annuity: Again, the amount is paid in lump sum but the withdrawals can be made only after specified time limit
• Annual premium deferred annuity: The premium paid to the insurance company is either in form of quarterly, or monthly or bi-annual or annual installments. Withdrawals are deferred to a later date.
• Variable annuity: This is more of a combination annuity scheme where you can chose either to pay a lump sum amount or in installments. You can choose the investment vehicle as well. Thus, the growth of your fund depends on vehicle chosen.
Thus, depending upon the scheme chosen by you, the amount deposited by you grows. At a time elected by you, the insurance company will start disbursing your deposits from your annuity account.
You also have a choice of withdrawing funds in lump sum after a certain time elapses.
Benefits associated with Annuities:
• Tax Deferral: The money invested in an annuity scheme stays tax free and grows tax free till the time you withdraw it. The age set for withdrawals is 59.5 years. Any funds withdrawn prior to this age bear an annual penalty charge of 10%.
• The insured gets a secured guaranteed return for the rest of life, especially post retirement
Thus, annuity offers you a medium of saving, ensuring avoiding probate for your heirs, safety of funds and much more.
Survivor universal life insurance 4088541883 san jose california connie dello...Connie Dello Buono
connie dello buono 4088541883 san jose california ca life ins lic 0G60621 on page 3 is about preserving your heir's inheritance, charitable gifts, key person coverage and wealth transfer
Annuities explained is a presentation which will explain everything you need to know about the major types of annuities, what are the best annuities and how to select the most appropriate annuity in your particular situation.
What is an annuity?
An annuity is an insurance-based contract between you, the owner, and the contract issuer.
This is basically how annuities work: You pay after-tax dollars to the issuer, the issuer invests the money for you, and any earnings accumulate tax deferred. At some point, the issuer pays out the principal and earnings to you or to your beneficiaries. Earnings are taxed as ordinary income when they’re distributed.
Annuity Basics is part of our continuing series of presentations for Financial Services Industry Training. We develop custom training specific to the financial services industry. Contact us for a quote or discussion of your needs.
Annuity is a term that is familiar to most of us and that we have been now hearing for over 200 years. Annuities are nothing but products offered by insurance companies that allow you to save on taxes and derive benefit on retirement. These accumulated funds are later repaid to you either for a fixed term, say 5 to 10 year, or for the rest part of your life.
Annuities are quite similar to Collateral deposits. CDs are offered by banks, similarly, insurance companies offer different return schemes on your annuity investments.
What is the meaning of annuity?
For a layman, an annuity is nothing but a contract between two parties, a person, also called as the insured and an organization which is nothing but an insurance company. The insurance company agrees to pay the insured an agreed upon benefit either in the form of regular interval payments or in lump sum.
Who offers an Annuity?
Annuities are presented by Insurance companies. They reach customers by the way of licensed agents. But before you chose to invest with the insurance company, you should check their insurance licenses. State and federal laws and insurance commissions govern the reserve funds, also known as State Legal Reserve Pools.
How does an Annuity Scheme work?
Annuity is a contract. The insured makes a deposit with the insurance company either in a single go or through regular small installments. Depending upon the type of annuity you choose, the money deposited with the insurance company will earn fixed or variable return.
Different Types of Annuity:
• Single premium immediate annuity: The amount is paid in lump sum and the benefits are derived from the immediate next month onwards.
• Single premium deferred annuity: Again, the amount is paid in lump sum but the withdrawals can be made only after specified time limit
• Annual premium deferred annuity: The premium paid to the insurance company is either in form of quarterly, or monthly or bi-annual or annual installments. Withdrawals are deferred to a later date.
• Variable annuity: This is more of a combination annuity scheme where you can chose either to pay a lump sum amount or in installments. You can choose the investment vehicle as well. Thus, the growth of your fund depends on vehicle chosen.
Thus, depending upon the scheme chosen by you, the amount deposited by you grows. At a time elected by you, the insurance company will start disbursing your deposits from your annuity account.
You also have a choice of withdrawing funds in lump sum after a certain time elapses.
Benefits associated with Annuities:
• Tax Deferral: The money invested in an annuity scheme stays tax free and grows tax free till the time you withdraw it. The age set for withdrawals is 59.5 years. Any funds withdrawn prior to this age bear an annual penalty charge of 10%.
• The insured gets a secured guaranteed return for the rest of life, especially post retirement
Thus, annuity offers you a medium of saving, ensuring avoiding probate for your heirs, safety of funds and much more.
Survivor universal life insurance 4088541883 san jose california connie dello...Connie Dello Buono
connie dello buono 4088541883 san jose california ca life ins lic 0G60621 on page 3 is about preserving your heir's inheritance, charitable gifts, key person coverage and wealth transfer
A Power Point presentation on how Fleur De Lis Financial/Mass Mutual can help you save for retirement in a conservative way, if you looking for safe investments, secure retirements, take a look at this presentation.
Debentures its types and Methods of Redemption of DebenturesGyananjaya Behera
This slides are the presentation of Debentures and its types and various types of Redemption of Debentures Methods and the various sources of redemption. All the details are mentioned in short for the presentation purpose.
As one become financially literate it would be beneficial to be familiar with useful terminology used on a consistent basis that involves making financial decisions. Wealth building begins with comprehending. Should an individual seek the proper guidance and do the needed research to understand money the economic crisis recovery will happen. Money behavior and practices are usually learned at home or from surroundings. Be a change agent. Be accountable of your own financial security and start securing today!!
Learn Today...Lead Tomorrow...Demonstrate Forever
LaKesha Landers, Program Director, Office of Financial Literacy
Life insurance is used for many different purposes. During this webinar, we will discuss how Corporate America is currently using life insurance, such as Non-Qualified plans, keyman protection, and buy sell funding. As well as what to look for when purchasing life insurance, as not all products are created equally. We will provide life insurance education on Term, Whole Life, Universal Life, No Lapse Guarantee, Indexed Universal Life, and Variable Universal Life.
An endowment policy is basically a life insurance policy which, apart from covering the life of the insured, helps the policyholder to save regularly over a certain time, so that he/she gets a lump sum amount on the policy maturity in case he/she lasts the policy term.
A life insurance endowment policy pays the complete sum assured to the beneficiaries if the insured expires during the policy term or to the policyholder on the maturity of the policy if he/she survives the term. Hence, it fulfills the dual necessity for savings and life cover under a common plan.
A Power Point presentation on how Fleur De Lis Financial/Mass Mutual can help you save for retirement in a conservative way, if you looking for safe investments, secure retirements, take a look at this presentation.
Debentures its types and Methods of Redemption of DebenturesGyananjaya Behera
This slides are the presentation of Debentures and its types and various types of Redemption of Debentures Methods and the various sources of redemption. All the details are mentioned in short for the presentation purpose.
As one become financially literate it would be beneficial to be familiar with useful terminology used on a consistent basis that involves making financial decisions. Wealth building begins with comprehending. Should an individual seek the proper guidance and do the needed research to understand money the economic crisis recovery will happen. Money behavior and practices are usually learned at home or from surroundings. Be a change agent. Be accountable of your own financial security and start securing today!!
Learn Today...Lead Tomorrow...Demonstrate Forever
LaKesha Landers, Program Director, Office of Financial Literacy
Life insurance is used for many different purposes. During this webinar, we will discuss how Corporate America is currently using life insurance, such as Non-Qualified plans, keyman protection, and buy sell funding. As well as what to look for when purchasing life insurance, as not all products are created equally. We will provide life insurance education on Term, Whole Life, Universal Life, No Lapse Guarantee, Indexed Universal Life, and Variable Universal Life.
An endowment policy is basically a life insurance policy which, apart from covering the life of the insured, helps the policyholder to save regularly over a certain time, so that he/she gets a lump sum amount on the policy maturity in case he/she lasts the policy term.
A life insurance endowment policy pays the complete sum assured to the beneficiaries if the insured expires during the policy term or to the policyholder on the maturity of the policy if he/she survives the term. Hence, it fulfills the dual necessity for savings and life cover under a common plan.
Do you have enough savings for your retirement? Get to know what an annuity is and how to invest in an immediate annuity plan to build your retirement corpus.
Planning for the old age when the ability to earn diminishes while the expenses to live a dignified and healthy life start rising is of utmost importance.
Learn to understand the different types of life insurance. Life insurance is different from most other types of insurance (like health, car and homeowner’s insurance) in at least one key respect: It covers against an event that is certain to occur at some point in time — the policyholder’s death. For this reason, life insurance should be viewed through a different lens than other insurance — more specifically, as an asset, instead of an expense. http://news.davidlerner.com/news.php?include=145418
Spencer Lodge Fund Advisers Dubai Life Insurance. Spencer Lodge MD of Fund Advisers Dubai Universal life insurance offers you the freedom to increase or decrease your policy’s death benefit to fit your individual needs. Policies have minimum and maximum premium amounts that you must meet to maintain your coverage, but the timing of payments can be flexible. Access to cash values Universal life insurance policies have a cash value that has the potential to increase over time. If financial needs arise, you can tap into your policy by taking tax-advantaged policy loans and making partial withdrawals without income taxes.
A brief explanation of how the variable annuity works in retirement income planning, and the risks associated with it.
A variable annuity is an investment product, not an insurance product.
Retirement: What you need to know to retire successfullyMichael Goodfellow
The financial decisions you make as you ease into retirement will have implications that may be felt, quite literally, for the rest of your life. Retirement is a major life change. Clearly, a fulfilling retirement requires not only financial preparation, but also a clear vision of what kind of life you’d like to lead during retirement.
Life Insurance vs Investment Plans - So Which is Better.pptxhaniyashah3
Make an informed decision by going through the article at PNB MetLife for Life Insurance vs Investment Plans. Explore more about advantages and disadvantages too.
2. Is an annuity
right for you?
Ask these questions:
Are you concerned about outliving your income or Will you need the money before you reach 59 1/2?
maintaining your lifestyle during retirement? Annuities are designed to be retirement vehicles.
Therefore, if you make a withdrawal before age
Accumulating funds in a deferred annuity during
591/2, the IRS may subject you to a 10 percent early
pre-retirement years can help minimize a gap in income
withdrawal penalty in addition to any applicable
throughout your retirement years. Both immediate and
ordinary income tax. Contractual withdrawal charges
deferred annuities offer a variety of income options,
may also apply.
including a guaranteed lifetime income option that can
complement or supplement other sources of income
you may have. Are you currently in a higher income tax bracket than
you expect to be in after you retire?
If you have an employer-sponsored retirement If so, deferring payment of income taxes until you
plan, such as a 401(k) or SIMPLE IRA, have you actually withdraw the funds after your retirement may
contributed the maximum? work to your advantage because you may be in a lower
tax bracket at that time.
These types of plans allow for tax-deductible
contributions and can provide tax-deferred growth.
If you have maxed out contributions to your 401(k)
and IRA, and want to save more for retirement on a
tax-deferred basis, an annuity may be appropriate. IRS
contribution limits do not apply to non-tax-qualified
annuities.
3. Annuities . . . what are they?
An annuity, generally, is a payment received at regular intervals.
Annuity contracts, typically considered long-term investments, are sold by life insurance
companies. You can establish an annuity contract to put aside money for retirement or provide
yourself with a regular stream of income in retirement.
When it comes to making sure you are financially prepared for retirement, annuities can be very
powerful vehicles. They provide the means to accumulate funds on a tax-deferred basis, which
can make a significant difference in your ability to achieve the lifestyle you envision for yourself
throughout this potentially very active stage of life.
How an annuity works Types of annuities
In exchange for either a single deposit or a series There are two basic types of annuities –
of deposits you make into your annuity, the
insurance company promises to make a series of An immediate annuity is funded by a single deposit that
payments to you out of the annuity … payments is converted into a steady stream of income that will
you can use to supplement your income after commence immediately.
you retire, or while you transition from partial to A deferred annuity is funded by either a single deposit
full retirement. or a series of deposits and has two distinct phases: the
‘deferral’ phase, during which time your money can
The guarantees in an annuity are backed solely accumulate on a tax-deferred basis, and the ‘income’
by the claims-paying ability of the insurance phase, when your contract values are converted into a
company and should be a key consideration in stream of income.
making your purchase decision.
– and, your immediate or deferred annuity can be either
fixed or variable.
• Fixed: The rate of return is set and guaranteed for
a specific time by the insurance company. This type
of annuity may appeal to you if you have a more
conservative approach to retirement or are looking
for a vehicle to serve as a conservative portion of your
retirement portfolio.
• Variable: The rate of return varies based on the
investments that you choose. Variable annuities typically
offer numerous investment options, can help diversify a
retirement portfolio, and can be allocated according to
your risk tolerance level. The performance of variable
funds is not guaranteed and can fluctuate.
Because variable annuities are investment products,
they are sold by prospectus, which will be provided to
you by your financial representative.
4. Annuities…part of a well-diversified
A well-diversified retirement portfolio can create the level of income you want during retirement. Attaining the level
of income you want can be challenging because retirement today is vastly different from what earlier generations
experienced, on a number of levels.
• The retirement years are now thought of in terms of activity, enjoyment, adventure, and fulfillment – rather than
years of rest.
• The fact that people are now living longer presents the challenge of making sure your income will last as long as you do.
• Traditional sources of income from
pensions and Social Security may not be
sufficient to fund the retirement lifestyle
you want. Fewer people have access
to pensions. In 1992, more than 32%
of workers were covered by a defined
benefit plan from their employer; now,
only about 20% are.1 In addition, Social
Security replaces only about 27% of
a person’s pre-retirement income for
high-wage earners and 40% for average
earners.2
• Annuities provide a way to accumulate
money on a tax-deferred basis, and they
create a stream of income that can be
used to fund your active retirement years.
The stream of income from your annuity
can complement or supplement other
sources of income.
1 Monthly Labor Review, Trends in Retirement Plan
Coverage Over the Last Decade/February 2006
2 EBRI: 2006 Retirement Confidence Survey Fact Sheet
Annuity features and benefits
Both fixed and variable annuities can offer: • Tax-deferred growth. The interest on fixed annuities,
as well as the increase in value of variable annuities,
• A variety of income options to allow you to structure is not subject to taxation until withdrawn. This can
your retirement income according to your needs. be especially appealing if you expect to be in a lower
• Guaranteed lifetime income options, for you alone income tax bracket after you retire.
or you and a joint beneficiary, to address the risk of Variable annuities are distinguished from fixed annuities
outliving your assets or leaving your survivor without because they offer:
income.
• Multiple investment options offering professional
• The option to receive income for a specific number management. Variable annuities offer a number of
of years that you choose, instead of over your investment fund options which are managed by
lifetime. This can be attractive to people who want dedicated and experienced professionals. This allows
to supplement their income during the early years your assets to be allocated to match your investment
of their retirement when they expect to be more goals, time horizon, and risk tolerance.
active, especially if they have other resources that will
become available at later life stages, such as from the • Variable investments that provide the potential to
liquidation of property or other assets. keep pace with inflation.
• A guaranteed death benefit for your heirs. Deferred • Tax-free, cost-free transfers of assets between
annuities provide a guaranteed death benefit. If the owner available investment funds.
dies before converting the contract values into an income
stream, the direct beneficiary will receive the amount • Variable income plan options.*
deposited into the annuity, minus any withdrawals * Note: The performance of variable funds is not guaranteed. No
– or – the contract value, whichever is greater. investment strategy can guarantee a profit or protect against a loss.
5. retirement portfolio The Mutual
Northwestern
Annuities … how they are taxed Financial Network
The income plan payments received from a non tax-qualified annuity
Advantage
are derived from a combination of principal and earnings. The principal
portion is not subject to taxation. The earnings portion of each payment,
called ‘gain,’ is subject to income tax in the year received. This type of Because the guarantees in annuities are only
income payment spreads the potential tax liability over a number of years. as good as the claims-paying ability of the
insurance company that backs them, the
Because tax-qualified annuities are generally funded with pre-tax dollars,
track record of the company should be a key
each income payment is fully subject to taxation in the year received.
factor in your purchase decision.
One alternative to converting your deferred annuity contract values
into a guaranteed income plan is to take partial withdrawals. For The Northwestern Mutual Financial
a non tax-qualified annuity, taking partial withdrawals results in Network’s reputation is built on the solid
all taxable gain being taken out of the contract before the tax-free foundation of The Northwestern Mutual
principal. For a tax-qualified annuity funded only with pre-tax Life Insurance Company, which was founded
dollars, all of the partial withdrawal is subject to income tax.
in 1857 and is one of the most respected
If you choose not to convert your deferred annuity into an income insurance companies in operation today.
plan, and instead surrender it for a lump sum of cash, the entire gain Northwestern Mutual has received the best
in the contract would be subject to income tax in the year of surrender. possible insurance financial strength ratings
Because both non tax-qualified annuities and tax-qualified annuities from all four major rating agencies:
were designed as retirement vehicles, the federal law that applies to
annuities discourages annuity owners from taking money out of an A++ A.M. Best June 2009
annuity before retirement age. For example, withdrawals, surrenders, AAA Fitch Ratings June 2009
or income payments taken from an annuity before the owner has AAA Standard & Poor’s June 2009
reached age 59½ may be subject to a 10 percent early withdrawal Aaa Moody’s Investors Service April 2009
penalty tax, in addition to ordinary income tax.
Third-party ratings are subject to change. Third-party
ratings are a measure of a company’s relative financial
Retirement arrangements are subject to a variety of IRS rules with strength and security but do not reflect the performance
regard to eligibility, adoption, annual reporting, and taxation. The of variable funds. The performance of variable funds is
tax treatment of traditional IRAs and other qualified retirement not guaranteed and can fluctuate so that the value of your
contract can be more or less than your original investment.
arrangements, including income tax deferral on the earnings, is the
same regardless of the funding vehicle chosen. Under the Northwestern Mutual Financial
This information is provided for educational and/or promotional Network, we have set a standard for client
purposes. It does not contain legal or tax advice and is not service that goes above and beyond what
intended to be and cannot be used to avoid any penalties under the you may have come to expect from a
U.S. federal tax law. You should always seek tax advice regarding financial services provider. We believe in
your particular circumstances from an independent tax advisor.
working for you, and with you, to help you
meet your needs for financial protection and
Typical Costs accomplish your immediate and long-term
financial security goals.
In choosing an annuity product that will best serve your needs, it is
also important to take the costs into consideration. Quality is exemplified in the products,
investment options, and services we offer.
Fixed Annuities: Typically, there are no additional charges or fees
because the current interest rate is net of the expenses. We are committed to providing service and
support as long as you need us.
Variable Annuities: As is the case with all investment products,
expenses and fees may apply and vary from insurance company to
insurance company. The most common are mortality and expense
fees, portfolio fees, and contract fees.
Withdrawal charges typically apply in the early years of a deferred fixed
or variable contract and are deducted from amounts you withdraw.
Contact your Northwestern Mutual financial
The cost for any available optional benefits and riders offered with the representative today to learn more about the
annuity would be deducted, in addition to the fees previously mentioned. role annuities can have in your retirement
portfolio.
6. Northwestern Mutual Financial Network (NMFN) is the marketing name for the sales and distribution
arm of The Northwestern Mutual Life Insurance Company (Northwestern Mutual), Milwaukee, WI, and
its subsidiaries and affiliates.
All securities are offered through Northwestern Mutual Investment Services LLC, (NMIS), Suite 600,
611 E. Wisconsin Avenue, Milwaukee, WI 53202, 1-866-664-7737. Member FINRA and SIPC. NMIS is
wholly owned by Northwestern Mutual.
Variable contracts have limitations. This material must be preceded or accompanied by a current
prospectus or offering circular. You should carefully consider the investment objectives, risks,
expenses and charges of the investment company before you invest. Your Northwestern Mutual
Investment Services Registered Representative can provide you with a contract, a fund prospectus
or offering circular that will contain the information noted above, and other important information
that you should read carefully before you invest or send money.
www.nmfn.com
92-0530 (0208) (REV 0609)