Below are the main terms of the Single Premium Deferred Annuity. Please note this is only a partial description of the terms. Full description is included in the annuity policy.
to view a sample of the Single Premium Deferred Annuity policy.
to view a Certificate of Disclosure for the annuity policy terms.
As the name suggests, you make one contribution into the annuity when you purchase it. This premium will start earning interest from the date the annuity contract is issued.
Guaranteed Interest Rate
When purchasing the annuity you will decide on the term during which you will earn a minimum guaranteed interest rate. The terms available under this annuity are 5, 7, or 10 years. The interest rate you will earn during that period cannot be lower than the guaranteed interest rate regardless of any changes in the market.
Annuitizing the annuity means to convert the amount you accumulated in your annuity account into a stream of monthly payments. You may annuitize your account at the end of the guaranteed interest term. You also have the option to annuitize the account at any time after the first year of the annuity.
When annuitizing your account you will have a number of options to choose from. You can receive payments for a certain number of years or for the rest of your life.
The annuity contract includes withdrawal charges in case you decide to withdraw your funds prior to the end of the guaranteed interest period. Those charges are reduced over time. They are also waived in certain situations, for example, if the annuity owner dies.
Market Value Adjustment
Market Value Adjustment (MVA) is used to adjust the value of your annuity account in case you decide to withdraw the funds prior to the end of the interest guarantee period. The purpose of the MVA is to adjust the account – up or down – to the changes in the interest rate in the market.
10% Free Withdrawal
During each year of the annuity you may withdraw up to 10% of the annuity value free from withdrawal charges.
Accumulated Interest withdrawal
During the term of the annuity you may withdraw the monthly interest accumulated in your account free of withdrawal and MVA charges. This option can provide you a monthly income without reducing the principal amount of your annuity.
When selecting the best annuity for you make sure you fully understand the term of each annuity. While annuities have many advantages, they may have early withdrawal fees and other restrictions.