Whether your client is looking for a safe and secure retirement vehicle like a fixed annuity with an interest rate that is guaranteed for a specified period, or they want to leverage gains in the market while hedging against loss, there is a retirement vehicle for each client’s specific needs.

Today there are annuity products with riders that can give clients lifetime income and even elder care provisions. Annuities are popular retirement vehicles because earnings grow tax-deferred in accordance with IRS requirements until withdrawn, at which time they are taxed as ordinary income.

Use our Fixed Annuity Calculator with your clients to show fixed growth

Fixed Annuity Calculator

Use our Immediate Annuity Calculator with your clients to show payout options

Immediate Annuity Calculator

Two Main Annuity Strategies

Deferred Annuity:

A deferred annuity begins in the accumulation phase and later converts to the payout (annuitization) phase. You may make one or more payments, which grows tax-deferred as long as they remain in the annuity. Earnings are taxed as ordinary income when they are withdrawn from the annuity.

Immediate Annuity:

With an immediate annuity, regular payments are generated within a short period of time. Payments can be structured with great flexibility. Typically, an immediate annuity becomes a binding contract once it is funded and cannot be broken. The principal investment is surrendered in return for the promise of a guaranteed income stream paid by the insurance company.

Annuities are tax deferred vehicles and unlike other retirement accounts such as 401(k)s and IRAs, there is no annual contribution limit. An Annuity grows tax-deferred. When you eventually make withdrawals, the amount you contributed to the annuity is not taxed, but your earnings are taxed ordinary income. There is a 10% federal tax penalty if you withdraw money before age 59½ for reasons other than death or disability.
When you invest in your annuity you also choose how you want your eventual payouts to be calculated. Options include:

1. Income for guaranteed period (period certain), a specific payment amount for a set period of time. Upon death, beneficiaries will receive the remainder of payments you have not received for the guaranteed period.

2.Lifetime payments. A guaranteed income payout during your lifetime only (not beneficiaries). Payouts are determined by how much you invest and life expectancy.

3. Life with period certain. A combination of a life annuity and a period certain annuity. This offers a guaranteed payout for life that includes a period certain phase. If you die during the period certain phase your beneficiaries will continue to receive the payment for the remainder of the period.

4. Joint and Survivor Annuity. The co-Annuitant will continue to receive payouts for the rest of his or her life after you die. A popular option for married couples.

Fixed Annuities are an insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract. The insurance company guarantees interest earnings and principal.
Fixed annuities can be deferred or immediate. A deferred contract accumulates guaranteed rates of interest and an immediate Annuity makes fixed payments for whatever period is specified. The convenience and predictability of a set payout makes a fixed annuity a popular option for retirees.Fixed annuities pay guaranteed rates of interest, which makes them appealing to investors wary of the stock market’s ups and downs. What also makes them appealing are their low investment minimums.
The Downside of a Fixed Product is the trade-off stability for windfall gains that may be experienced with a Variable Product which is tied to an Index or Mutual Fund, less risk means means less possible gains.
A Variable Annuity allows you to choose from a selection of investments in Securities and Mutual Fund-like portfolios called sub-accounts and then pay a level of income in retirement that is determined by the performance of the investments. Earnings and principal are not guaranteed unlike their fixed counterparts. Variable Annuities are designed to maximize investment potential and capital growth. As with Fixed Annuities, gains escape taxation until withdrawal. The downside is obvious, Variable Products are volatile by definition and nature. The increased potential for capital gains Should be carefully measured with the increased risk inherent to these products. Another downside is the taxes Variable Products are subject to. As with Fixed Annuities, you’ll pay taxes on a Variable Annuity’s gains when you withdraw them, plus a 10% penalty if you’re under age 59 ½. However in addition, any long-term capital gains taxed at ordinary income rates when you withdraw them rather than Capital gains. Variable’s can also have steep sales commissions and ongoing management fees.
An Equity-Indexed Annuity is a combination of a Fixed and a Variable Annuity (the best of both worlds if you will).
Equity-Indexed Annuities offer a guaranteed return, as with a Fixed Annuity, there is an appeal of a low-risk guaranteed minimum return. The upside as with Variable Annuities, you also have an opportunity for higher gains if there is a rise in the indices your money is in. Equity-Indexed annuities are usually tied to the performance of a benchmark indices, such as the S&P 500, the Nasdaq, etc. Equity-Indexed Annuities are also very complicated vehicles, and they come in a wide variety of forms. This complexity makes them sometimes difficult for many to completely understand. They also don’t necessarily credit the entire return of the market index they’re tied to but only a percentage (capped earnings). Different Equity-Indexed Products are structured in different ways. In addition, the surrender charges can run very high and last very long compared with Fixed Products.
Immediate annuities or Income Annuities, are pretty straightforward (much like a Life Insurance policy in reverse) you give the insurer a lump sum of cash in return for regular income payments for specified period (which can be Lifetime or Period Certain). A Deferred Annuity can also be converted into an Immediate Annuity. Advantages can be the ability to lock in an income stream, this is attractive for retirees who are looking for a guaranteed income each month. With a Variable Immediate annuity, you have the potential of keeping the buying power of your lifetime payments ahead of inflation by divvying up your investment among a variety of mutual-fund-like portfolios, however Variable Products can hold a high risk which is contrary to the stability desired at retirement.
A Longevity Annuity provides protection against outliving your money late in life. This type of annuity requires you to wait until you reach a latter age (80 or so) to begin receiving a payout. Once the payout begins, the annuity provides a guaranteed, regular amount of income for the rest of your life. As with any Deferred Annuity, your money in a Longevity Annuity grows until you annuitize the contract, the later you choose to begin payments, the larger the payments will be. While the amounts needed to pay into the annuity may be smaller (because you are deferring payout for so long) than those of a regular Deferred Product, risks are you may die before you annuitize leaving nothing to your heirs.

SPIA (Single Premium Immediate Annuity)

An immediate annuity can turn assets into regular payments beginning now and lasting for the rest of an individual’s life or for a specified period of time. Immediate annuities are single-payment annuities paid at contract inception. Any large sum of cash – from an inheritance, legal settlement, sale of a business or home – can be converted into an income stream for the specified duration.

  • Allianz Life Insurance Company
  • American General
  • American National
  • Athene
  • Genworth
  • Genworth Life of NY
  • Great American
  • Lincoln Life
  • Minnesota Life
  • New York Life
  • North American
  • Protective
  • Reliance Standard
  • Sagicor
  • Securian
  • SBLI
  • Symetra
  • The Standard
  • United of Omaha
  • U.S. Life of NY
  • VOYA 

Rated SPIA

A Single Premium Immediate Annuities with the “Impaired Risk” (or Rated Age) payout option. Individuals who are deemed impaired risks may qualify for enhanced income payouts, as compared to the non-impaired. The enhanced payout options can be significantly higher.

The term “Impaired Risk” can describe a wide assortment of medical conditions. These conditions, past and present, may have been the result of an accident, disability, or disease etc… The most significant factor is whether the conditions will produce a reduced life expectancy. If so, a lifetime guaranteed payout is projected over a shorter time period; providing a larger payout of the single premium deposited. Equally, this “rated age” could allow for a smaller premium deposit to fund a desired set payout amount. Thus freeing that excess money for other purposes!

  • United of Omaha