Annuities FAQs

What will the interest rate be?
What is the Penalty Tax and When Does it Apply?
How frequently can I contribute to the annuity?
When can my benefits start?
How frequently do I receive my benefit check?
What if I want to take my money out before the end of the surrender penalty period?
Do I want to receive benefits for life?
What benefits are paid to my spouse if I die first?
When does the contract end?

What will the interest rate be?
The interest rate will vary depending on the company, the interest rate environment, and the length of the annuity. Be wary of an annuity that promises a high first year interest. The only guarantee there is that next year the rate is LOW! If you choose to do business with us your fixed annuity will have a GUARANTEED rate for the length of the annuity (3 years, 5 years, 7 years, etc…). You won’t have to guess to see what the rate is. After that period we’ll shop the rate for you again.
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What is the Penalty Tax and When Does it Apply?
An IRS penalty tax, currently 10%, mat be payable on any withdrawal of interest or qualified premium made prior to age 59 1/2.
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How frequently can I contribute to the annuity?
An immediate only can accept only one payment. Other annuities can accept many payments as often as you’d like. They may have a minimum of $50 or $100 per deposit though.
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When can my benefits start?
For an immediate annuity your 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.
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How frequently do I receive my benefit check?
You 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 account.
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What if I want to take my money out before the end of the surrender penalty period?
Most 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.

The 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 1/2.

In certain situations with some annuities, surrender penalties may be waived (nursing home stay, death, disability, etc…).
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Do I want to receive benefits for life?
Some 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 dies.
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What benefits are paid to my spouse if I die first?
Although a lifetime annuity on only one annuitant generates the highest regular benefit payment, most married couples want the annuity payments to continue to the surviving spouse. 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 annuitant.

When 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 on a lower income. For example, instead of a level $1000 per month while both annuitants are alive, they could possibly receive $1200 per month while both are alive and $700 per month upon the death of one spouse.
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When does the contract end?
Many 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.

You 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.

The regulations for qualified plans dictate that you start receiving a minimum distribution after you are 70 _ years old. To learn more about immediate annuities that are available to you and/or to receive a quote, call a us.
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