Understand Your Options


You need to understand how annuities work before you can make a decision. Reach out to learn more about how to secure a protected*, long-term retirement income.

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What’s An Annuity?

Annuities can provide a guaranteed lifetime income*. In addition, fixed annuities and fixed index annuities also provide protection of your principal, regardless of market conditions. In this way, both of these annuity types could help you secure your retirement savings.

However, fixed index annuities (FIAs) offer additional advantages. First, FIAs are tax-deferred. Therefore, any potential indexed interest you earn is not taxable upon credit of the interest. Instead, you only pay taxes when you withdraw your money.

Also, an FIA can provide a reasonable rate of return**, while securing your principal. Finally, FIAs may also have options for riders, such as income riders or long-term care riders. This additional flexibility allows you to plan for many aspects of retirement.

With an FIA, you may also be able to provide income to loved ones after you pass away. Some FIAs offer spousal benefits and optional death benefits as well.

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That Lasts

An FIA is an agreement between you and an insurance company. You determine how much of your savings to put in it. Then, the insurance company guarantees to keep your principal, minus some initial costs, safe. After the accumulation period (when your money may be allowed to grow), you may begin to take an income. How much you get and the payment schedule is something determined by the details of the agreement. For example, you may select annual payments or monthly payments. Of course, any tax questions regarding annuity income should be brought to the attention of a qualified tax advisor.

How Annuities Work

Most fixed index annuities have two phases. First, there’s an accumulation phase, during which you let your money earn interest. This is followed by a distribution or payout phase, during which you receive money from your annuity.

A fixed index annuity also guarantees you will receive at least the minimum guaranteed interest credited to the contract. Remember that all of these guarantees are backed by the claims-paying ability of the issuing company.

With a fixed index annuity, you defer paying taxes on your contract’s interest until you receive money from the contract. Tax-deferred interest means the money in your contract can grow faster.

Your principal and bonus are never subject to market index risk.  A downturn in market index(es) cannot reduce your contract values.


The accumulation phase begins as soon as you purchase your annuity. Your annuity can earn a fixed rate of interest that is guaranteed by the insurance company or an interest rate based on the growth of an external index.

The distribution phase of a fixed index annuity begins when you choose to receive income payments. You can always take income payments in the form of scheduled annuitization payments over a period of time, including your lifetime. And many fixed index annuities allow you to take income withdrawals as an alternative to annuitization & payments. Either way, you can choose from several different payout options based on your personal needs, including options for lifetime income, guaranteed.

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More About FIAs

Fixed index annuities are allowed to grow, tax-deferred. Because of the principle of compound interest, your overall annuity may grow. Additionally, you might be able to take a larger income from your annuity than expected.

With an FIA, you’ll need to assign beneficiaries. If you choose a death benefit or a spousal benefit, your beneficiaries will be able to access these funds without probate.

Usually, you can select which index or indexes you want aligned with your fixed index annuity. Also, you’ll need to review details such as the annuity’s cap, participation rates, spreads, and credit method choices. These factors may affect how much potential indexed interest you receive, how the credit gets calculated, and when that money may be credited to your account.
FIAs have other protection benefits available, too. Income rider options create a way for your income payments to increase over time. This can help adjust for inflation or simply increases in costs of living. Optional long-term care rider benefits could create an alternative way to pay for some long-term care needs. Other benefits may be available, as well.

Which Line: Red or Green?

Some people don’t mind the ups and downs of the stock market. That’s what the “red line” represents. However, some options available in retirement allow you to see an increase when markets are up. Yet, no loss when markets are down. This is represented by the “green line.” FIA’s are one way some retirees protect their retirement savings, no matter what happens in the market.

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Reach out to learn more about annuities, your options, and how to secure a long-term retirement income with protection of principal.*

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