Annuites

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What is Annuities?

An annuity is a type of savings plan that can be used to accumulate assets on a tax-deferred basis for retirement and/or to convert retirement assets into a stream of income.

While an annuity is an insurance contract and benefits from all the guarantees and security that an insurance policy provides, an annuity is, in reality, the opposite of traditional life insurance:

  • Life insurance provides financial protection against the risk of dying too soon
  • An annuity provides financial protection against the risk of living too long and running out of income during retirement years

There are two basic types of annuities:

  1. Deferred Annuities. A deferred annuity has two distinct phases: the accumulation phase and the income phase. During the accumulation phase, a client will contribute premiums to the annuity, where their savings accumulates on a tax deferred basis until needed for income purposes.
  2. Immediate Income Annuities. An immediate income annuity is purchased with a single premium and income payments begin immediately or shortly after the premium is paid.

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Benefits of a fixed indexed annuity

In the past, the choices were either (1) receive the guarantee of principle and a minimum amount of interest, or (2) link to the market with the potential of higher returns, but also accept the downside risk to the principal.

A Fixed Indexed Annuity provides the best of both worlds. Guarantee of principal and the potential of market-linked growth with no risk of loss of principal due to market downturns.

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Safety and Guarantee of Principal

A fixed index annuity (also referred to as an equity indexed annuity) combines the safety of a traditional fixed annuity – a guarantee of principal, with the potential for market-linked interest crediting. Unlike most securities or mutual funds where the account balance can fluctuate due to market performance, the principal deposited into a fixed indexed annuity is never at risk due to market downturns. A contract owner of a fixed indexed annuity participates in market-indexed interest without market-type loss.

The Power of Tax Deferral

All annuity values accumulate on a tax deferred basis until withdrawn. Therefore, money can grow faster because interest is earned on dollars that would otherwise be paid as taxes. The principal earns interest and the interest compounds allowing faster accumulation over a shorter period of time, thereby earning a greater return on the principal deposited.

Fixed indexed  annuity contracts generally allow for some form of penalty-free withdrawals, up to 10% of the full accumulation value, once each contract year after the first contract anniversary.

One Life America is founded on the core principles of honesty, integrity and real family values.

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