Annuities

As stated previously, but worth stating again “Annuities are the only investment vehicle that can guarantee investors they will not outlive their income.”  That is a powerful statement in today’s investment environment where a loss in your investment accounts is commonplace.

Technically speaking, annuities are contracts that provide for the future systematic liquidation (Annuitization or Supplemental Contract) of the accumulated asset over a certain period of time.  With an annuity the investor will make a single deposit or periodic deposits to an insurance company, preferably Family Benefit Life.  The investment risk is now the responsibility of the insurance company because it has guaranteed a certain interest rate to the investor, regardless of how market rates change.  The company then takes that money and makes appropriate risk level investments. The financial soundness of an insurance company is monitored closely by the State Department of Insurance.  (Standard’s Link) In return, the insurance company agrees to provide a certain guaranteed interest rate of return, or better than the guaranteed rate if possible, while it accumulates.

 When the investor is ready to start a systematic liquidation plan (Annuitization or Supplemental Contract) a time frame of disbursement and other options will be determined.  Under most liquidation plans, a guaranteed dollar amount is promised to the investor for the remainder of their lives to be received either monthly, or annually.  Regardless of how long the annuitant lives, that dollar amount will be delivered as promised. 

There are other benefits to investing in a tax-deferred annuity besides not being able to outlive your income.  They are:

1. Unlike other tax-deferred investments, (IRA’s, 401k, etc.) there isn’t an income limitation.
2. The very nature of the tax-deferred growth allows a much higher yield on your money.

Annuities truly are one of the most reliable and safe investment products in the marketplace today.  

Family Benefit Life offers two types of annuities:  The Single Premium Annuity (SPA) and the Flexible Premium Annuity (Flex).  Their differences can be found in their names, Single and Flexible.

Single Premium Tax-Deferred Annuity (SPA):  Within this investment type we have 3 time frames of minimum investment, based on early withdrawal penalties.  We have a sliding interest rate scale, which means the more money that is placed into the account, the higher interest rate you will receive on a guaranteed basis the first year.

Flexible Premium Tax Deferred Annuity (Flex):  This is an annuity that allows you to make a systematic deposit to accumulate your funds, instead of one deposit. This is helpful to a large number of people because it provides the discipline that they may personally lack in saving money for the future.  The current surrender schedule for the Flex is 10 years based upon the original contract date, not on any particular deposit.  This allows for the investor to utilize this as a possible holding account for future investment purchases that are tax-deferred.  Most clients utilize an automatic deposit from their personal checking account, savings account or employer to continually place funds into this annuity.  The Flex is also our annuity rider that can be attached to an insurance policy.