Below are some of the key features of any annuity policy:
To learn more about annuities you can visit the Texas Department of Insurance website
Guaranteed Interest Rate
The interest you earn on the annuity is either fully guaranteed or has a minimum guaranteed rate that can increase over time.
When the interest rate is fully guaranteed (like in the immediate or deferred annuities) you will earn an interest on the annuity that will never change, even if the interest rate in the market changes.
When there is a minimum guaranteed interest rate (like in the Savings Annuity) the rate will never be lower than the guaranteed rate (3% per year in the case of the Savings Annuity) but may increase if the market conditions allow it.
In an annuity, the interest your earn is not taxed until the time you withdraw the funds from the annuity. That deferral of taxes allows your total annuity balance to grow faster compared to none tax-deferred with the same return.
Note: There are no tax advantages to purchasing a fixed annuity in IRAs, 401(k)s or other similar retirement savings vehicles.
Flexible Income Options
During the guarantee period, an investor has the option to take systematic withdrawals, usually limited to their interest. Investors have the option to start, stop and adjust their withdrawal amount, subject to certain limitations. An annuity’s income stream can also be guaranteed by the insurance company for as long as the investor lives.
Annuity proceeds paid to the beneficiaries upon the investor’s death are excluded from probate on their estate.
In most states in the United States an annuity is protected from judgement. That means that the annuity balance cannot be used to pay the judgement against you.
Each annuity has different terms, payments options, and other limitations. Make sure you understand the annuity you purchase. If you have any questions, give us a call at (855) 966-1111.