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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.
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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.
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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.
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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.
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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).
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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.
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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.
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Tax Disclosure
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