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
- 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.