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Annuities

Annuities

Annuities are savings plans designed to help client’s save for retirement. Money put into an annuity grows tax deferred and are not taxed until you withdraw the money. Annuities also provide safety of principal (no loss of principal) and can be designed to generate a guaranteed income for life.

People are living longer and that means more time and savings will be spent in retirement. Annuities are one way to create financial security by growing and protecting your money leading up to retirement. Annuities are long-term savings products.

Annuity Benefits:

  • No loss of principal
  • Can guarantee lifetime income
  • Tax-deferred growth (earnings not taxed until paid out)
  • Provides Death Benefit protection
  • Typically provide a higher guaranteed rate of return than certificate of deposits
  • No fees compared to mutual funds or stocks

Types of Annuities

Fixed Annuity

A fixed annuity is a policy that you can purchase, and in turn, will pay you a fixed interest rate. This type of annuity is great for people who are looking for tax-deferred growth and want a fixed rate of return.

Indexed Annuity

Fixed index annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and earnings potential that is linked to participation in the growth, if any, of an index or benchmark, e.g., S&P 500. This type of annuity may be suitable for people who are looking for tax-deferred growth and want a minimum interest rate guarantee but also like the idea of potentially being able to benefit from rising markets.

Immediate Annuities

An immediate annuity is for someone with a lump sum of money who is interested in immediately turning that amount of money into a guaranteed income stream. In other words, unlike the other types of annuities: fixed, index or variable, which are also called deferred annuities; the immediate annuity doesn’t accumulate any earnings for you at all. It’s purchased strictly to provide you an income payment on a regular basis which begins right away.

Fixed Fixed Indexed Variable
Rate based on investment performance     X
Tax-Deferred X X X
Fixed or annuitized payouts X X X
Death Benefit X X X
Risk Tolerance Low Low Mid to High

 

An annuity can play an important role in securing a comfortable and rewarding retirement, by supplementing the monetary gap that occurs when you retire.

Disclosure

Federal income tax laws are complex and subject to change. This information is based on current interpretations of the law and is not guaranteed. Neither the company nor its representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions.

Insurance Services offered through Kairos Insurance Services, CA Insurance License #0H15005, a wholly owned subsidiary of Kairos Financial Group, Inc.