"What is an annuity?

To put it simply, an annuity is a contract between an individual (called the annuity owner) and an insurance company for a guaranteed interest-bearing policy with guaranteed annuity income options. (Please visit the Learning Center for more information.)

What is a tax-deferred annuity?

It is a tax-advantaged product issued by an insurance company where long term financial needs can be solved better than with most other financial alternatives.

What is the major advantage of annuities?"
(e. g. www.naa)
 
All annuity earnings are able to accumulate interest completely tax deferred. This means an individual can avoid taxation of growth until the money is needed and therefore earn triple interest - interest on the principal, interest on the interest and interest on the earnings that normally would be paid in taxes. (Please visit the Learning Center for more information.)

"Who wants to own an annuity?

People who want a safe way to reduce taxes; people who want to decide when to pay taxes.

Is an annuity safe?

Yes - with annuities, your principal is 100% safe and you are guaranteed to earn at least a minimum interest rate. This guaranteed safety is possible because each insurance company issuing annuities is supervised and regulated by each state’s insurance department; plus, they are backed by a Legal Reserve System and a Guaranty Fund. (Please visit the Learning Center for more information.)"
(e. g. www.naa)
Is the annuity for everyone?

No. Money earmarked for short-term needs should not go into the annuity. However, at least six months of income should be saved for emergencies outside of the annuity. Also, those who need current income should consider an immediate annuity, not a deferred annuity. On the other hand, those looking for one of the most far-sighted ways “to accumulate” dollars on a tax-advantaged basis will find the deferred annuity extremely beneficial.

"Who should consider purchasing an annuity?

Anyone who wants a safe way to accumulate funds through triple compounding without paying current taxes in earnings should definitely consider purchasing an annuity

Since a withdrawal of principal is tax-free and IRS penalty free, can principal be withdrawn first and then interest?

No, the IRS considers that interest earnings are withdrawn first. Naturally, any portion of a withdrawal exceeding interest earned would be a tax-free return on principal.

What kinds of dollars can be used to buy annuities?"
(e. g. www.naa)
Money from maturing CDs, money market funds, checking and savings accounts, mutual fund accounts, stocks and bond funds, IRA roll overs, etc. can all be used to purchase an annuity.

"What if the annuity is paying an interest rate less than other financial alternatives?

You should first compare the value of the “no market risk” feature of the annuity to other alternatives you are considering. You then must remember that the interest on many alternatives is currently taxable every year. Also, Section 1035 of the Internal Revenue Code allows annuity owners to move their dollars from one annuity to another annuity income tax-free.

Will an annuity be tied up in probate proceedings?"
(e. g. www.naa)
No - as long as the owner picks a “named” beneficiary other than his or her estate, the beneficiary will receive the annuity dollars without the delay, expense and hassles of probate proceedings.

Will the beneficiary be taxed on the interest that has increased inside the annuity?

"Yes, beneficiaries will be taxed on the tax-deferred interest when they receive those dollars. However, if a beneficiary is the spouse of the owner and the owner dies, he/she may elect to continue the annuity and postpone taxes. Once again, the client decides when to pay income taxes. If the beneficiary is not the spouse and the owner dies, then dollars must be totally withdrawn within five years or they may be received over the beneficiaries life expectancy. However, this latter option must be elected during the first 12 months following the owner’s death.

Is an annuity identical to an IRA?

No. Although an annuity is often used as the funding vehicle for an IRA, many annuities are purchased with after-tax dollars that are not deductible. Also, with annuities, there are not government-imposed limits on how much an individual can contribute to an annuity."
(e. g. www.naa)

Statistics

"$7 trillion of personal wealth is held collectively by people over the age of 50. (www.foxbusiness.com)

Every 8 seconds, a baby boomer turns 50. (www.cnbc.com)

There are about 78 million baby boomers living in the US as of 2009 (US Census and USAtoday.com)"
(e. g. www.naa)
As 78 million baby boomers, the largest generation in American history-enter retirement, the need for practical strategies to generate sustainable retirement income is greater than ever. (www.limra.com)

Many of the 78 million baby boomers will rely on their assets in fixed and variable annuities to help maintain their lifestyle in retirement. (www.limra.com)

"Tip: Pick up General Price Lists (GPL's) every six months from area funeral homes and cemeteries and carry them in your presentation book. Then provide the financial solution of an affordable “Burial Insurance” plan, ask if you can be their “burial man/woman,” write it up and gracefully leave to serve another family. (Insider Secrets of a Financial Expense Specialist by Alan Benedict)

I recommend a maximum of $40-$50 monthly per person, and having the protection approved. Many people in this demographic share the attitude that “some burial insurance is better than none.” (Insider Secrets of a Financial Expense Specialist by Alan Benedict)

Most of the seniors we target don't even have $50,000 in lifetime savings; otherwise they wouldn't be open to your recommendation of a $10,000 burial insurance program. (Insider Secrets of a Financial Expense Specialist by Alan Benedict)

Whether an agent is in a rundown urban neighborhood, a depressed rural area or a tract home suburb built in the 1950's the final expense agent looks at the bigger picture and knows those seniors who buy “Burial Insurance” love someone. (Insider Secrets of a Financial Expense Specialist by Alan Benedict)"
(e. g. www.naa)