An annuity is a contract between an insurance company and an individual that may provide certain guarantees and features. A premium is paid into the annuity in exchange for a guaranteed return or periodic payments to begin immediately or at a certain date in the future back, to the contract owner. The contract owner may potentially receive these payments for as long as you live depending on the option elected.*

There are many different kinds of annuities that offer various features that can help individuals accomplish certain financial objectives. There are; fixed annuities, variable annuities, indexed annuities, immediate annuities, deferred annuities, and combinations thereof.

Through our comprehensive planning process we do find circumstances where annuities make the most sense for some of our client’s assets. Annuities are not right for everybody, so how do you know if an annuity would be right for you?

If you would like to have greater potential return than as a deposit at the bank or with government bonds, and you are interested in guaranteed returns or income for life* or that your risk would be less than the general stock market, an annuity could make sense for you. These features generally come at the price of having less potential return than the general stock market’s full upside.

Annuities also grow without being taxed, which can be especially beneficial to higher income individuals, however gains are taxable as ordinary income upon withdrawal.

Annuities typically do have early surrender charges but often offer interest only or up to 10% free withdrawal per year. Also if you are under age 59 1/2 there may be an additional penalty assessed by the government on the withdrawals.

A fixed index annuity (FIA) typically offers a minimum rate of return annually with the possibility of higher earnings by linking the interest rate calculation to the performance of an index such as the S&P 500. Some common ways the additional rate is calculated include: participation rate (a portion of the index, commonly called the participation rate is used to determine the interest rate), cap (the maximum rate of interest than a FIA can earn is limited or capped at a certain percentage), or fixed bucket (the interest rate is credited at the end of a certain period of time).

The caps and some of the other features of these annuities can be changed throughout the life of the contract by the insurance company Fixed and Index annuity contracts have a minimum guaranteed rate of return*. We attempt to find the insurance companies that stay consistent on this issue. Fixed and Indexed annuities are not variable annuities and generally have lower costs than variable annuities.

If you would like more information or to talk to us over the phone please fill out the questionnaire on this page and we will email information or you can request a call from our advisor. In the meantime there are links you’ll see to your left that provide more details on some different annuities and the specific contracts.

Some examples of Insurance Companies we work with:

*All guaranteed are based on claims paying ability of the insurance company.

Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Withdrawals may be subject to federal and state income tax, and if taken prior to age 59 1/2, an additional 10% federal penalty tax. Surrender charges may apply. Guarantees are based on the claims-paying ability of the issuer.



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You can contact John with questions
by calling (412) 348-0556 or emailing