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A variable annuity is a tax-deferred investment product that allows you to maintain control of your money while staying invested in the market. A variable annuity can provide you with a lifetime income stream and a death benefit for your loved ones. Guarantees are based upon the claims paying ability of the issuing insurance company.
With a variable annuity, you can either start putting a little away at a time for a long-term goal, such as retirement, or invest with one purchase payment. Over the years, your contract value has the potential to accumulate tax-deferred before you begin your income stream.
What are the potential benefits of purchasing a variable annuity?
Is a variable annuity right for me?
A variable annuity might be right for you if you want to protect your investment without sacrificing market exposure and access to income.
Phases of an annuity: There are two phases to a variable annuity: accumulation (pay in) and annuitization (pay out).
Here is a helpful resource to learn more about this subject.
Variable Annuities: Learn about retirement planning
For additional information, or to determine if a variable annuity is right for you, please contact us to talk with a Financial professional.
Fixed index annuities (FIAs) offer several advantages for investors seeking principal protection, potential for growth, and retirement income.
Here are some of the key advantages of fixed index annuities:
Principal Protection: FIAs offer principal protection, meaning that the initial investment is guaranteed by the insurance company, subject to the claims-paying ability of the insurer. This can provide investors with peace of mind knowing that their principal is protected from market downturns.
Potential for Growth: While FIAs provide downside protection, they also offer the potential for growth through participation in the performance of a market index, such as the S&P 500. However, the growth potential is typically limited by participation rates, caps, or other factors specified in the annuity contract.
Tax-Deferred Growth: Earnings within FIAs grow tax-deferred, meaning that investors do not have to pay taxes on the investment gains until they make withdrawals from the annuity. This tax deferral can help investors maximize the growth of their retirement savings over time.
Lifetime Income Options: FIAs often offer optional riders or features that provide guaranteed lifetime income payments, regardless of market performance or how long you live. These income riders can help investors create a predictable stream of retirement income to supplement other sources of retirement income, such as Social Security and pensions.
Flexibility: FIAs may offer flexibility in terms of contribution amounts, investment options, and withdrawal strategies. Some annuities allow investors to make additional contributions over time, while others offer various payout options, including lump-sum withdrawals, systematic withdrawals, or annuitization.
Death Benefit Protection: FIAs typically provide a death benefit that guarantees the return of the initial investment to the beneficiary upon the annuitant's death, minus any withdrawals or surrender charges. This can help ensure that investors' heirs receive a portion of their investment if they pass away before annuitization or exhausting the account value.
No Market Risk: Unlike variable annuities, which invest in underlying mutual funds and expose investors to market risk, FIAs do not directly invest in the stock market. Instead, they offer returns based on the performance of a market index without actually participating in the market itself. This can appeal to conservative investors seeking to avoid market volatility.
Creditor Protection: In some states, FIAs may offer protection from creditors, providing an additional layer of asset protection for investors.
It's essential for investors to carefully review the terms, fees, surrender charges, and potential limitations of FIAs before purchasing them to ensure they align with their financial goals and risk tolerance.
Not a deposit | Not FDIC insured | Not guaranteed by any bank | May lose value | Not insured by any government agency
Variable annuities are sold by prospectuses, which contain more complete information including fees, surrender charges (contingent deferred sales charges) and other costs that may apply.
Contact your registered representative to obtain current prospectuses. Please read the product and fund prospectuses carefully before you invest or send money. Investors should consider the investment objectives, strategies, risk factors, charges and expenses of the underlying variable portfolios carefully before investing. The fund prospectus contains this and other information about the underlying variable portfolios.
Early withdrawals or surrenders may be subject to surrender charges. Withdrawals are also subject to ordinary income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. For tax purposes only, withdrawals will come first from any gain in the contract. Federal and state tax laws in this area are complex and subject to change. Consult your personal tax adviser on all tax matters. Withdrawals may reduce the death benefit, cash surrender value and any living benefit amount.
There is no additional tax-deferral benefit for contracts purchased in an IRA or other tax-qualified plan because these are already afforded tax-deferred status. An annuity should only be purchased in an IRA or qualified plan if the contract owner values some of the other features of the annuity and is willing to incur any additional costs associated with the annuity.
The product features, benefits, and limitations associated with a particular variable annuity will vary from product to product and from state to state. Guarantees are based upon the claims-paying ability of The issuing insurance Company. Guarantees do not apply to the investment performance or account value of the underlying variable portfolios.
Neither asset allocation nor diversification ensures a profit or protects against loss in a declining market. Income means 1) during the accumulation phase the amount you withdraw from your annuity in a contract year. 2) during the annuitization phase, the amount you receive in annuity payments each year.
Death benefit is only available during the accumulation phase of the contract and if the Annuitant dies prior to annuitization.
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© Colorado Financial Advisors 2015-2023. All rights reserved. Securities offered through The O.N. Equity Sales Company Member FINRA/SIPC, One Financial Way Cincinnati, Ohio 45242 (513) 794-6794. Investment Advisory Services offered through O.N. Investment Management Company. Insurance licenses in California, Colorado, Florida, Texas and Montana.