|
Annuities - Frequently Asked Questions
Please note that the answers to these questions are general, and
may vary depending on the company, state, and annuity contract.
Always consult your actual contract to determine answers applicable
to your situation.
How does an annuity work?
How can I find out more about Bankers annuities?
Can I withdraw money from an annuity?
Can I cash in an annuity?
Will there be any money for my heirs?
Is an annuity like life insurance?
Are there age limits for purchasing an annuity?
How does an annuity work?
An annuity is a contract between an individual (the contract
owner) and an insurance company.
The contract owner makes a single premium payment or a series of
payments to the insurer, and receives a payout on a regular basis
in return for the premiums paid. Depending on the type of annuity,
the payout may start immediately (immediate annuity) or at a later
date (deferred annuity). With a deferred annuity, the interest
earned accumulates on a tax-deferred basis until the payout
period.
The parties to an annuity contract are the insurance company, the
annuitant (the person whose life expectancy is used to determine
the payout of an annuity) and the contract owner. The contract
owner is the person who purchases the annuity, and is usually the
same person as the annuitant.
[back to top]
How can I find out more about Bankers annuities?
The fastest way to get more information about Bankers annuity
plans is to call your
local branch office and speak to a Bankers agent. Your agent
can provide complete details about all of our annuities, plus
answer any service-related questions.
[back to top]
Can I withdraw money from an annuity?
Depending on the contract, you may be able to withdraw all or
part of an annuity's value during the accumulation period. With
many annuities, you can take up to 10 percent or more of its value
per year without a withdrawal fee. However, if you withdraw more
than the set percentage in a year, the insurer is likely to impose
a withdrawal charge, usually a percentage of the annuity's total
contract value. However, the percentage typically declines each
year. Withdrawals of less than a stated minimum usually aren't
permitted.
Note: a 10% tax penalty may apply to interest earnings that you
withdraw before you reach age 59 ½. For more complete tax
information, please consult your tax advisor.
[back to top]
Can I cash in an annuity?
With most deferred annuities, you can redeem your contract
anytime during the accumulation period for its cash surrender value
(the accumulated value, less any surrender charges). The surrender
charge is usually a percentage of the value of the contract or
premiums paid. The percentage is typically reduced or eliminated
over time, so the amount of the surrender fee you might pay usually
declines over time.
[back to top]
Will there be any money for my heirs?
Most annuity contracts include an option for naming a
beneficiary who will receive the annuity benefits if the annuitant
dies. Typically, if the annuitant dies before the contract's
maturity date, the full value of the annuity contract, including
premiums paid and interest earned, will be paid to the
beneficiary(s). If death occurs on or after the maturity date, but
before payment of the entire contract balance is made, the
remaining balance will be paid, as described in the contract. (If
the contract owner is not the annuitant, and the owner dies, the
cash surrender value will be paid).
[back to top]
Is an annuity like life insurance?
No. Life insurance provides money after you die to those who
rely on you for their financial well-being. An annuity is designed
to address the risk of outliving your resources, so it provides
money for you.
[back to top]
Are there age limits for purchasing an annuity?
Some annuities set a maximum issue age for annuitants and
contract owners, usually anywhere from 70 to 85 years old.
[back to top]
Tax Disclosure
|