An annuity is a contract between you and an insurance company that is designed to meet retirement and other long-range goals, under which you make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date. Annuities typically offer tax-deferred growth of earnings and may include a death benefit that will pay your beneficiary a specified minimum amount, such as your total purchase payments. While tax is deferred on earnings growth, when withdrawals are taken from the annuity, gains are taxed at ordinary income rates, and not capital gains rates. If you withdraw your money early from an annuity, you may pay substantial surrender charges to the insurance company, as well as tax penalties. There are generally three types of annuities — fixed, indexed, and variable.

In a fixed annuity, the insurance company agrees to pay you no less than a specified rate of interest during the time that your account is growing. The insurance company also agrees that the periodic payments will be a specified amount per dollar in your account. These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse.

In an indexed annuity, the insurance company credits you with a return that is based on changes in an index, such as the S&P 500 Composite Stock Price Index. Indexed annuity contracts also provide that the contract value will be no less than a specified minimum, regardless of index performance.

For a definition of a variable annuity, please visit http://www.finra.org/industry/issues/variable-annuities.

Immediate Bonus Annuities . . .
There are several immediate bonus indexed annuities in the marketplace today. One product is a flexible premium deferred indexed annuity that features a 5% Immediate Interest Credit on all net premiums received in the first seven Policy Years.  That means if you contribute $100, immediately your account will be credited $105.Plus, you will earn additional annual interest based on the index performance, participation rate and cap!

Competitive Highlights

• A flexible premium deferred indexed annuity, protects all premiums paid and earned interest from market loss

• 5% Immediate Interest Credit on all net premiums received in the first seven Policy Years

• 10-year declining withdrawal charge period

• Access to 10% of the accumulation value each year after the first policy year

• The policy must be established with a minimum of $25 per pay period salary reduction/deduction PACP

• Guaranteed Lifetime Income Rider available for at an additional cost, for qualified annuitants. GLIR is REQUIRED on any application submitted as a single sum over $25,000.

Indexed Annuities
There are generally three types of annuities — fixed, indexed, and variable. In an indexed annuity, the insurance company credits you with a return that is based on changes in an index, such as the S&P 500 Composite Stock Price Index. Indexed annuity contracts also provide that the contract value will be no less than a specified minimum, regardless of index performance.  These type of annuities protect all your contributions, premium paid, and earned interest from market loss. Below is an example of an indexed annuity versus a fixed annuity and the S&P 500 results.

Overview

A fixed-indexed annuity is a type of annuity that grows at the greater of a) an annual, guaranteed minimum rate of return; or b) the return from a specified stock market index (such as the S&P 500®), reduced by certain expenses and formulas. At the time the contract is opened, a term is chosen, which is the number of years until the principal is guaranteed and the surrender period is finished. In a robust stock market, you will not achieve the actual performance of the index due to the formulas, spreads, participation rates, and caps applied to fixed-indexed annuities, as well as because of the absence of dividends (see below). However, in a down market you won’t ever lose principal (provided the underlying insurance company stays solvent, and to date no insurance company has ever failed to pay out on a fixed annuity). Many investors find that fixed-indexed annuity returns more closely approximate CDs, traditional fixed annuities, or high grade bonds, but with the potential for a small hedge against inflation in an up market.

Fixed vs. Fixed-Index Annuities

Technically speaking, fixed-indexed annuities are a type of fixed annuity. But a fixed-indexed annuity is different than a standard fixed annuity in the way that earnings are credited to the annuity. For a standard fixed annuity, the issuing insurance company guarantees a minimum interest rate. The focus is on safety of principal and stable, predictable investment returns. With fixed-indexed annuities, the contract return is the greater of a) an annual minimum rate, or b) the return of a stock market index (such as the S&P 500®), reduced by certain expenses and formulas. If the chosen index rises sufficiently during a specified period, a greater return is credited to the owner’s account for that period. If the stock market index does not rise sufficiently, or even declines, the lower minimum rate is credited (usually 0% – 2%). The owner is guaranteed to receive back at least all principal less withdrawals (provided of course that the owner has held the contract for the minimum period of time specified in the contract).

Participation / Index Rates

The participation rate, also known as the index rate, is the percentage increase in the index by which a contract will grow. For example, if the participation rate is 75% for a fixed-indexed annuity that is based on the S&P 500®, and the S&P 500® increases 10% for the year, the contract would be credited with 7.5%. The participation rate is usually less than 100%. The participation rate will vary based one the length of the term and on your contract. Note: Dividends are never included in the total return of fixed-indexed annuities. For example, if the S&P 500® was up 10% based on the points gain of the market, the total return may actually be higher once you factor in dividends. Over time dividends have made up as much as 40% or more of the total return of the S&P 500®. It is important to know that you will be forgoing dividends in exchange for principal protection on all fixed-indexed annuities.

Floor & Cap Rate

The floor refers to the minimum guaranteed amount credited to the account. At the time of this writing (see Update date at the bottom of this page), this rate is almost always between 0% – 2%. The cap rate is the annual maximum percentage increase allowed. For example, if the chosen market index increases 35%, and the contract has a 10% cap, the increase will be limited to 10%. Some contracts do not have a cap rate (these tend to have a lower participation rate, such as 30% to 50% compared with 75% to 100% for a plan with a cap rate). The cap varies depending on the length of your term — fixed-indexed annuities with longer commitment periods (surrender periods) tend to have a higher cap rate, whereas annuities with shorter surrenders periods tend to have a lower cap rate. NOTE: The cap may reset annually and is subject to change at each renewal.

Index Credit Period

There are four basic ways in which amounts are credited to an owner’s contract at specific points in time:

• Annual reset: this measures the change in the market index over a one-year period.

• Point-to-point / term: similar to the annual reset, but the period is usually five to seven years.

• Annual high water mark with look back: the highest anniversary value is used to determine the gain.

• Monthly Averaging: you have 12 “month-a-versary” points throughout the year, and at the end of each year the insurance company adds them up and divides by 12.

Fees

While there are no up-front commissions charged when purchasing a fixed-indexed annuity, depending on the product, there are  caps, participation rates, and spreads. Surrender charges may be imposed if withdrawals in excess of a certain amount are made (usually 10% per year) or if the contract is surrendered completely. Surrender charges can be as high as 10% on non-bonus contracts and higher on bonus contracts. Surrender charges typically decline over time, usually by 1% per year.

Regulation

Fixed-indexed annuities are considered to be fixed annuities by law and as such they are not typically issued by prospectus (a document which provides detailed information on how an annuity contract works, the risks involved, and all expenses or charges). Nor are fixed-indexed annuities typically regulated by FINRA or the SEC (under certain circumstances, an insurance company may register a fixed-indexed annuity product with FINRA or the SEC). If a fixed-indexed annuity is registered, a prospectus must be provided to the buyer. Only individuals with both securities and insurance licenses may sell registered fixed-indexed annuities.

Other Features

Some fixed-indexed annuity contracts offer, as an optional feature and for an additional fee, a guaranteed death benefit and/or a guaranteed lifetime withdrawal benefit (GLWB). In the death benefit, if an annuitant dies before annuity payments begin, the contract will pay the named beneficiary(s) the greater of the investment in the contract (less any withdrawals), usually compounded at 4% to 5% annually through the date of death. With the GLWB, the principal will usually compound at 6% to 8% for a minimum of 10 years, at which point the owner can begin to withdrawal (usually 5% at age 65, for life).

A Single Premium Deferred Annuity is a tax-deferred annuity that will only accept a single payment. This payment may be from writing a check directly to the company or through a transfer or rollover. Single Premium Deferred Annuities may be purchased with qualified or non-qualified monies.

Get a Paycheck for Life

The questions everyone must face are: “Am I saving enough to live 30 years in retirement? Is there a possibility that I may outlive my money?” If you are not sure, we may have a solution for you.

Benjamin Franklin once said, “In this world nothing can be certain, except death and taxes.” Today, there is one more guarantee, our company’s Guaranteed Lifetime Income Rider. Combined with an indexed annuity, the Guaranteed Lifetime Income Rider can provide a paycheck for life.

The Guaranteed Lifetime Income Rider is an optional benefit that may be added to your annuity policy at issue for a nominal annual fee. The Guaranteed Lifetime Income Rider can provide the annuitant with a Guaranteed Withdrawal Payment from his or her annuity that will last a lifetime…income that cannot be outlived! Through the use of the rider’s formula, we determine the Guaranteed Withdrawal Payment from the annuity when the policy owner decides to elect the guaranteed income benefit.

The rider provides a guaranteed stream of income from the annuity for life, even if the policy’s accumulation value reaches $0. The guaranteed lifetime income payments will continue until the death of the annuity owner. If the owner dies before the policy’s accumulation value is depleted, there are two options:

1. The spouse can continue to receive the Guaranteed Withdrawal Payments until the policy’s accumulation value is depleted.

2. The spouse or beneficiary can receive any remaining accumulation value in a lump sum or in a series of payments.

The minimum issue age for the rider is age 35 for 403(b) and 457(b) policies and age 40 for all other plan types. When you are ready to retire, the rider allows you to take lifetime payments from your annuity in the form of a guaranteed withdrawal payment, even if the policy’s accumulation value goes to zero provided:

• The policy has been in force for at least one year,

• You are at least age 55 for 403(b) and 457(b) policies or you are at least age 60 for all other plan types,

• All policy loans, if any, have been repaid, and

• A withdrawal is permitted from the annuity under applicable law and regulation.

The GLIR is an optional benefit for which premium is charged. It is not available in all states. Annuity contracts are subject to surrender charges during the early years of the contract and a 10% federal tax penalty may be assessed on withdrawals taken before age 591/2.