What is an annuity?

Many people have made annuities part of their retirement plan — for good reason. While you cannot predict market performance, inflation, future life events or how long you'll live, annuities can help take these retirement risks out of the equation by providing guarantees that protect your retirement income needs.

All guarantees are based on the continued claims paying ability of the issuing company and, on variable annuities, do not apply to the performance of the variable subaccounts, which will vary with market conditions.

How annuities work

Simply put, an annuity is a contract between you and an insurance company. You pay the insurance company one or more purchase payments. In exchange, you'll have access to convenient retirement income payout features and optional benefits (at additional cost), depending on the type of annuity.

Annuities are unique because of their combination of tax deferral and the opportunity for a guaranteed stream of income payments. 

Fixed and Fixed Indexed Annuities

There are two types of annuities — fixed and variable. The main difference is based on how the purchase payments are allocated. A financial advisor who is familiar with your financial goals, objectives and risk tolerance can help you determine which type of annuity might be right for you.

Fixed Annuities Offer

• Guaranteed rate of return. The insurance company guarantees a minimum interest rate that you will receive, based on the annuity you purchase.
• Security. Fixed annuities guarantee principal and a minimum interest rate, adjusted for any withdrawals.
• Flexible income options. Choose from a lump-sum payment, or equal payments over a period you select, including the rest of your life.

Fixed Indexed Annuities Offer

• Growth potential. A unlike fixed annuities which the interest credit is fixed and know in advance, indexed annuities credit interest based on changes in a major index such as the S&P 500.   
• Security. Indexed annuities guarantee the principal, and over the long-term offer the potential for greater earnings than a fixed annuity.
• Flexible income options. Choose from a lump-sum payment, or equal payments over a period you select, including the rest of your life.

You should consider the investment objectives, risks, charges and expenses of the variable annuity and its underlying investment options carefully before investing. Read the prospectus carefully before you invest.

Before you purchase, be sure to ask your financial professional about the annuity's features, benefits, risks and fees, and whether the annuity is appropriate for you, based on your financial situation and objectives. Variable annuities are complex investment vehicles that are subject to market risk, including the potential loss of principal invested.  Annuities are long-term insurance products.

Withdrawals that do not qualify for a waiver may be subject to a withdrawal charge. Withdrawals are subject to income taxes and withdrawals before age 59-1/2 may incur an IRS 10% early withdrawal penalty.

There is no guarantee that the annuity will keep up with inflation.