ANNUITIES
An annuity allows a customer to deposit money (premiums) with an insurance company that can earn interest and grow on a tax-deferred basis with the agreement that the insurance company will then provide a series of payments back to the customer at regular intervals.
People typically purchase annuities to provide or supplement retirement income they will receive from Social Security, pension benefits, investments and other sources. You can convert your annuity into a stream of income that can then be paid over a fixed period or for your lifetime. You can take withdrawals of varying amounts when you need the income.
- Am I too young to buy an annuity? You are never too young to plan for your future and an annuity may be a good choice for your long-term savings goals, such as for retirement. The question you need to ask yourself is - “will I need to access the money before I am 59 ½?” Although you can take a distribution from an annuity prior to age 59 ½, the distribution may be subject to a 10% premature distribution penalty;
- How do annuities and life insurance values affect financial aid for college? Annuity and life insurance policy values are not reported on the Free Application For Federal Student Aid (FAFSA). Non-Qualified annuities, however, are counted as an asset on the CSS Profile. The other benefit of life insurance and annuities for college planning, is the ability to accumulate cash values that can be used to help pay for college costs. Often annuities are used to fund a Roth IRA and Roths offer the option for a penalty free distribution if used for higher education costs
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- Who can be the beneficiary of my life insurance or annuity policy? You can name any legally competent person as a beneficiary, including your spouse, children, other relative or friend. You can also name an entity as a beneficiary, such as a trust or charity. The proceeds of your policy will be paid directly to your beneficiary, privately and without the delays of probate. pay off monthly mortgage payments due to illness or injury;
- How does taking money from my annuity or life insurance policy affect my Social Security? Money taken from an annuity is considered earnings and is taxable as ordinary income and must be considered in determining taxation of your Social Security benefits. Money received from an annuity that are a return on premiums paid, are received income tax-free and should not affect the taxation of Social Security benefits.make your premium payments if you become unemployed;
- Are income payments from my annuity taxable? Yes, if your annuity was purchased through a qualified account, such as an IRA, 403(b) or 401(K), all payments will be subject to ordinary income taxes. If your annuity was purchased with after-tax dollars, you will receive the earnings first, which are taxable as ordinary income. Once you have received all of your earnings, payments will be made from the premiums you made to policy which are received tax-free. If you purchase an income rider on your annuity, once your account value has been exhausted, you will continue to receive guaranteed payments for life, however, those payments will be received income taxable..
IMMEDIATE
Provides income payments that normally begin within a year after the premium is paid.
DEFERRED
Provide income payments that begin later, often after many years. Deferred annuities are designed for long-term savings purposes.
- Available to purchase using a single lump sum, or with flexible premiums over time.
- When it comes time to take income from your deferred annuity, you will have many options available to meet your needs.
VARIABLE ANNUITIES
A variable annuity is a tax-deferred retirement vehicle that allows you to choose from a selection of investments, and then pays you a level of income in retirement that is determined by the performance of the investments you choose. Compare that to a fixed annuity, which provides a guaranteed payout.
OFFERS
- Upside potential of the securities market.
- Choice of a variety of subaccounts as well as fixed income account options.
- Ability to transfer money between different types of investments without current tax liability.
- No guarantees which may result in a loss of principal.
- Guarantees are based on the claims-paying ability of the issuing company.
- Standard & Poor’s®, “S&P®, S&P 500®, Standard & Poor’s 500, and 500 are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Life Insurance Company of the Southwest. The product is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of purchasing the product.
Guarantees are dependent upon the claims-paying ability of the insurer and do not protect the value of the variable product portfolios, which may fluctuate. Variable contract holders are subject to investment risks, including the possible loss of principal invested.
Variable contracts are sold by prospectus. For more complete information, please request a prospectus from your registered representative. Please read it and consider carefully a Fund's objectives, risks, charges and expenses before you invest or send money. The prospectus contains this and other information about the investment company.
