ANNUITIES

McFolling Financial offers multiple Annuities products.  Description of some of the Annuities products go here. 

An annuity is an agreement between you and an issuer where you agree to give the issuer principal. In return the issuer guarantees you fixed or variable payments over time. Annuities are issued by insurance companies, but they are not insurance policies.

An annuity is very comparable to a retirement plan. You can provide money in a lump sum or a small amount at a time. All of the capital in an annuity grows and compounds tax-deferred until you begin making withdrawals. Unlike retirement plans, there is no limit as to how much you can invest in annuities!

Since there are large numbers of annuity products on the market today, it can definitely make choosing the most appropriate annuity a very confusing process. There are actually only a small number of different types of annuities. When you are selecting an annuity, you will be given essentially three choices:

1) Timing of the payout – It can be deferred or immediate. The investor begins to receive payments immediately at the start of investing in an immediate annuity. This is for investors who need income immediately from their annuity. However, in a deferred annuity, the investor will receive payments starting at some date in the future, usually at retirement.

2) Investment type – It will be fixed or variable. Fixed annuities are invested mostly in government securities and high-end corporate bonds. In typically over a period of one to ten years, they offer a guaranteed rate. Variable annuities authorize you to invest in a selection of sub- accounts, like money market securities, security portfolios, and fixed interest accounts. These sub-accounts often have a corresponding managed investment portfolio, after which they are modeled and are tied to market performance.

3) Liquidity options – Most annuities allow you to withdraw your interest earnings or up to 15 percent per year without a penalty. There may be a penalty for any withdrawal from an annuity and may be subject to taxes. Also, there could be a 10 percent federal penalty if taken out prior to 59 years of age. Most annuities have a surrender charge, which is a penalty for making an early withdrawal above the free withdrawal amount. This surrender charge will typically decrease over a seven year period. Some annuities with surrender charges reward the investor by offering some kind of bonus. The insurance company normally adds on average 3% to 5% to the amount of your principal. Typically, bonus annuities have slightly longer surrender periods. Some of them charge a slightly higher fee than they will charge for their standard annuity. There are also annuities without any surrender charges for investors who might need spur of the moment access to their money. These annuities don’t offer bonuses. In exchange for 100% access to your money, they may also charge a somewhat higher fee than the typical annuity.