The annuity, in essence, is insurance against "living too long." In contrast, traditional life insurance guards against "dying too soon." Here is a summary of how annuities function. An investor hands over funds to an insurance company. The insurer invests the funds. At the end of the annuity's term, the insurer pays the investor his or her investment plus the earnings.

One negative aspect of an annuity is that you cannot get to your money during the growth period without incurring taxes and penalties. The tax code imposes a 10% premature withdrawal penalty on money taken out of a tax-deferred annuity before age 59-1/2, and insurers impose penalties on withdrawals made before the term of the annuity is up. The insurers' penalties are termed "surrender charges," and they usually apply for the first seven years of the annuity contract.

Variable annuities are sold by prospectus only. Your Smith Barney Financial Advisor can provide you with the prospectuses for the products in which you are interested. Investors should consider the objectives, risks, charges and expenses of the investment company. The prospectus contains this and other information. Please read the prospectus carefully before investing.

Most fixed annuities are sold as back-end loaded contracts, meaning no fees are assessed at the time of this product's purchase. The insurer makes its money ? on the "spread" between the interest it earns on invested premiums and the amount that it credits to an annuity. During the accumulation period, interest credited or earned on an annuity is not currently taxable to the contract holder. As long as the funds remain in the annuity, they preserve their tax ? deferred status.

A fixed interest rate is set at the time of purchase for 30% (33% in WA) of the account value. This fixed interest rate is calculated and credited daily. The portion of the account value linked to the S&P 500 Index, 70% (67% in WA), will be credited on the last day of the contract year if there is an increase in the S&P 500. No, an annuity contract is the sole property of the contract owner, and all ownership rights rest with the owner.

To qualify for the Annuity Purchase Program, the annuity must possess a non-qualified tax status and not be a variable annuity.

Yes. Transferable single premium immediate annuities with fixed payments and fully-paid deferred annuities with fixed payments in the payout phase are ideal. However, through the J.G. Wentworth Annuity Purchase Program??? you can also provide your clients liquidity for annuities with a death benefit, deferred annuities that are past their accumulation phase and equity indexed annuities. You can even provide options to your clients for partial payments.

To reduce the complexity of the options and annuity structure to meet the needs of our members and participants.

Just as with trusts, Casale & Bonner, P.C. has extensive experience in providing clients with advice involving insurance and annuities, but also is experienced in how these investment products can be abused and cautions clients that there are certain circumstances which make those products an inappropriate planning tool. Absolutely not.

Currently TaraFolio InvestorTM doesn't have an asset class for annuities, which are difficult to model, as they are illiquid assets. In other words, it's not easy to compute the daily/weekly volatility and correlation for an annuity.

An indexed annuity is different from other fixed annuities because of the way it credits interest to your annuity's value. Most fixed annuities only credit interest calculated at a rate set in the contract. Indexed annuities credit interest using a formula based on changes in the index to which the annuity is linked. The formula decides how the additional interest, if any, is calculated and credited.

Fidelity has a variety of annuities that you can exchange into. If you are still saving for retirement, we provide both fixed and variable tax-deferred annuities. Learn more about tax-deferred savings or use our evaluator tool to determine the type of annuity that's right for you. If you're ready to create retirement income, both fixed and variable income annuities feature income guaranteed3 for life — yours or both you and your spouse.

Life insurance pays your beneficiaries a substantial cash benefit should you die during the term of the policy -- essentially protecting them against the risk that you might die prematurely, placing them in financial jeopardy. Benefits from life insurance policies are designed to replace "lost" income; they usually provide significantly more than you've paid into the policy. Annuities are completely different -- they are designed to provide you with income during retirement.

Yes. Joint annuities offer slightly lower rates than single annuities, but provide guaranteed income for couples and then to the survivor for life.

Annuities and IRAs both provide tax-deferred growth, but there are differences. Anyone can invest in an annuity, in an unlimited amount. With an IRA, only those with earned income can invest, and contributions are limited. Also, an annuity can guarantee you an income for life; most IRAs cannot. In addition, the IRS says you must begin taking distributions from your IRA at age 70 1/2; most annuities do not require you to begin taking regular payments before age 85.

This depends solely on the risk tolerance of the investor. Most variable annuities offer attractive death benefit options, something comparable investments (like mutual funds) may not. Risk also depends on the selection of sub-accounts by the investor. The variable annuity buyer can reduce his or her risk by blending a selection of conservative, moderate, and aggressive sub-accounts within the annuity.

The interest rate index will be posted on this Web site in the What’s New section under Current Information. The index will be available during the last two weeks of the month prior to the month of purchase (e.g., the April annuity interest rate index was posted on March 21).

Retiree annuities are adjusted according to the Consumer Price Index (CPI) formula. If inflation, as measured by the CPI, increases by 3 percent in one year all CSRS retirees will receive a cost-of-living adjustment (COLA) in that amount.

While traditional life insurance guards against "dying too soon," an annuity, in essence, can be used as insurance against "living too long." With an annuity, you will receive in return a series of periodic payments that are guaranteed as to amount and payment period. Thus, if you choose to take the annuity payments over your lifetime (there are many other options), you will have a guaranteed source of "income" until your death.

Fixed rate annuities have minimum guarantees and "fixed" (or declared) interest rates. They are meant for the conservative investor that wants to take advantage of tax-deferral within a conservative investment. Since the interest rate from year to year is pre-determined or declared annually, the investor has a good idea of what his or her account value will be from year to year.