Annuities can potentially be an important part of your wealth protection strategy. In general, an annuity is a contract between you and an insurance company. You put money into the contract, and in return it has the potential to accumulate on a tax deferred basis to provide funds for retirement. Then, if you desire, receive a guaranteed income payable for life or for a specified period of time: generally a term of five or ten years. Guarantees are based on the claims paying ability of the issuing insurance company.

Here are some reasons you may choose to purchase an annuity:

  • You need to safely create wealth for your heirs
  • You need tax-deferred growth potential
  • You need your guaranteed stream of income in the future
  • You need your heirs to avoid probate upon your death
  • You have money that is designated for inheritance

There is a surrender charge imposed generally during the first 5 to 7 years that you own an annuity contract. Withrdaws prior to age 59-1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax.

Annuity Types and Their Benefits:

Fixed deferred annuities

  • Desire the security and safety of a guaranteed interest rate
  • Want tax deferral advantages
  • Have considerable assets to set aside for at least five years
  • Are looking to potentially convert into a future income
  • Are saving for retirement

Income annuities

  • Are in retirement or are entering retirement
  • Desire a guaranteed retirement income
  • Have a rollover or lump sum to convert into an income stream
  • Have concerns about outliving your income

To decide what option best fits your unique requirements contact a UIS branch to have our Annuity Professionals analyze you financial needs.

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