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 Deferred Annuities
- Annuities are one of the most over looked investments available today,mainly due to lack of knowledge regarding the product. The two basic types of annuities are Deferred and Immediate. A traditional Deferred Annuity is similar to a 'Certificate of Deposit' (CD), where your original deposit and interest are GUARANTEED for the amount of time you designate. However, the investment is held by an Insurance Company rather than a Bank. Deferred Annuities are available in both 'Single Premium' and 'Flexible Premium' options. Flexible Premium annuities allow for future deposits to be made.
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Unlike Bank CD's, all interest and growth that is not withdrawn from a
Deferred Annuity owned by an individual is tax deferred! Under current
Federal and most State tax law, you do not have to pay income taxes on
your earnings until you actually withdrawal it. This allows you to keep
more of your own hard earned money to work for you! And in most cases,
annuities also pay a higher interest rate than other Bank alternatives!
The tax-deferral on earnings is a powerful tool, which is usually not fully
understood by most investors. When you pay taxes on the growth of an asset
you not only loose part of your earnings, but you loose the opportunity you
would have had for more growth on the earnings had you not paid the taxes.
This has a staggering compounding effect, please use our
'power of tax-deferral calculator'
to see how much more money you keep for yourself when you keep all your
earnings and growth working for you! Annuities also offer safety, asset
management and many other advantages! But one of the biggest advantages by
far is annuity proceeds paid at death are generally payable to a beneficiary
FREE from Probate! This of course saves time and expense, which is prudent
Estate Planning!
In addition, earnings and growth reinvested in a deferred annuity do not count
as income when calculating any tax liability for your Social Security Payments!
Most Deferred Annuities also offer some liquidity! Most products allow you to
take your interest after 30 days and many products allow withdrawals up to 10%
of the accumulated account value each year without penalty! So you have the liquidity
and tax advantages you need all in one package (withdrawals prior to age 59 1/2 are
generally subject to a 10% penalty).
Immediate Annuities (SPIA)
- Many people looking for income in today's low interest rate environment are
finding Immediate Annuities (SPIA's) offer exceptional pay out alternatives. In
addition, SPIA's offer safety and tax advantaged income! SPIA's either pay a
guaranteed income for a specified period of time, or a lifetime income that
you can not outlive. If the annuitant has a medical impairment, the 'pay out' rate
can many times be accelerated and HIGHER.
An Immediate Annuity can provide tax benefits by spreading out the tax liability
of a large distribution from a Qualified Retirement Plan such as an IRA, 401 (k)
etc. over a period of time. For our clients who have heir's, many times they can
use a portion of the increased annuity income to purchase 'tax free' life insurance.
Thereby replacing a 'taxable' asset to your heirs - with 'tax-free' life insurance
proceeds!
Equity Indexed Annuities
- offer all the benefits described above, however they link
growth to several major market indexes, S&P 500 (® McGraw Hill), Dow Jones
Industrial Average, NASDAQ and fixed interest accounts. Many companies offer annuities
that allow you to transfer funds between the separate accounts, which allows multi-strategies
under one tax-deferred contract. Best of all no matter what happens to the markets, since
it is a fixed annuity by design you can't LOOSE any of your hard earned money! Your
original investment and a certain minimum interest rate are always GUARANTEED. Therefore,
you have the upside potential of these leading market indicators, with no downside risk of
principal!
Many investors do NOT realize what years of 'negative growth' really does to their portfolios
and the compounding effect it has. Equity indexed annuities NEVER have a negative year by
plan design.
Click here to play a game called 'Zero's Win', which is a simple card game that illustrates
what having NO losses truly means to your investments! Each card represents a real 'S&P
Index' return over the past 30 years (1972-2001). Choose any 10 cards for the market returns
each year represents, which will give you an 'AVERAGE return'. Then click the 'NO LOSSES' button
to see what your return would have been with an Equity Indexed Annuity product which had NO
negative returns for any of the years selected!
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