Types of Annuities
You primarily have a choice of two types of annuities: fixed or variable.

Fixed Annuity
A fixed annuity,** as the name implies, offers a fixed rate of return for a specific time period. The funds you invest are guaranteed by the insurance company. Fixed annuities are a relatively conservative investment since the investment risk is assumed by the insurance company. Guarantees are based on the claims paying ability of the insurance company.

Variable Annuity
A variable annuity** allows you to choose how your money is invested. With a variable annuity, there is the investment component paired with the insurance component. Your investment choices usually include sub-accounts, which are purchased in amounts called units. Variable annuities can have a greater possible investment risk, but offer higher income potential than fixed annuities.

How an Annuity Works
In addition to an insurance company, there are three parties to every annuity contract: the contract owner, the annuitant and the beneficiary or beneficiaries.

The contract owner is usually the investor in the annuity. The annuitant is the individual who receives the distributions from the annuity. Typically, the contract owner and the annuitant are the same person. The beneficiary is the person who receives the annuity assets of the insured.

There are two stages to an annuity: the accumulation (pay-in) stage and the distribution (pay-out) stage. During the accumulation stage of an annuity contract, the terms are flexible. You can make one contribution or a series of periodic contributions. At the distribution stage, you have several options. You may either take out your assets in one lump sum or withdraw them periodically through a process called annuitization.** There are various periodic payment options, including: Life Income - Designed to pay you a set dollar amount for life.

Life Income With Period Certain - Payments are made over your lifetime or a set number of years, whichever is longer. Your beneficiary receives the remainder of your annuity assets in the event of your death prior to the period-certain term.

Joint Survivor Income - Payments are made as long as one of the annuitants remains alive.

Period Certain Only - Payments are made for a specific period of time.

You must be careful when choosing a periodic payment option. Once it’s set, it cannot be changed. Your financial consultant can assist you with any questions you may have in making this decision.

Advantages of Annuities
The insurance company is responsible for all record-keeping pertaining to your annuity investment. You’ll receive quarterly statements, a toll-free telephone number to call with your questions, and an opportunity to participate in systematic contribution and withdrawal programs.

Tax Deferral - As with any annuity investment, you will not owe taxes until you choose to withdraw from your plan.

Unlimited Investments - You may invest as much as you want in your annuity.

Lifetime Income - Unlike other types of investments, some annuity investments may out-live you. If you select a life income option, you may receive income from your annuity for the remainder of your life. You may also set the payout of your annuity to cover the duration of your spouse’s lifetime.

Guaranteed Death Benefit - Most annuities provide a guaranteed death benefit based on the claims-paying ability of the insurer. If the annuitant dies during the accumulation stage, the beneficiary will receive the total of all contributions made (minus withdrawals) or the account value at the date of death, whichever is greater.

Avoidance of Probate - If the annuitant dies, the beneficiary automatically receives the account, no matter what a will or trust might say. An annuity contract takes precedent over all other legal documents.