Advantages of Annuity Ownership
Tax-Deferred Growth
One of the greatest benefits of an annuity is that the interest credited to
your annuity is completely untouched by current federal income tax during the
accumulation period. As a result of tax-deferral, interest is compounded and
your investment accumulates at a faster rate. Compound interest means that your
interest is calculated not only on the initial principal but also on the
accumulated interest of prior periods. You pay no federal taxes until you begin
to receive income payments or make a withdrawal.
Retirement Income
Whether you need short-term, fixed period, or lifetime payments, annuity
settlement options can provide a guaranteed retirement income. The most
commonly elected settlement options are Income for a Fixed Period; Life Annuity
with Payments for at Least a Fixed Period; Joint and One-Half Survivor; and
Income for a Fixed Period, Not to Exceed Life Expectancy.
Payout Options
The following descriptions explain several of the most commonly elected
retirement income settlement options provided.
Income for a Fixed Period - You may elect to receive periodic
payments at specific intervals, payable for a specific duration. For example,
you could request monthly payments over a 10-year period. If you die before
that period ends, your beneficiary receives any remaining payments.
Life Annuity with Payments for at Least a Fixed Period - This
settlement option offers you an income you can't outlive. Payments will be made
to you as long as you live, but no less than the specific duration requested or
the guaranteed period. If you die prior to the end of the guaranteed period,
your beneficiary will continue to receive payments for the balance of the
period.
Joint and One-Half Survivor - This option offers payments of a
fixed amount over the lifetimes of two payees. After the death of the primary
payee, the secondary payee receives 50 percent of the original payment amount
for the remainder of his or her lifetime. If the secondary payee is the first
to die, there is no reduction in the payment.
Income for a Fixed Period, Not to Exceed Life Expectancy - You
may receive monthly payments guaranteed for a fixed period based on your life
expectancy. If you die before receiving all benefits for the full period, your
beneficiary will continue to receive payments until the benefit period is
completed. This option is irrevocable and non-assignable, and has no commuted
value.
Protection for Your Family
An annuity can serve as an effective estate planning tool since it distributes remaining
contract values to your beneficiaries without going through probate. Some of the annuities offered by GAFRI subsidiaries also have some additional features that help you protect your assets:
Long-Term Care Waiver - To help ease the strain of certain
unforeseen events, a Long-Term Care Waiver may be available for no additional
charge. If, after the first contract year, the owner is confined to a nursing
home or other long-term care facility for at least 90 consecutive days, early
withdrawal charges may be waived on withdrawals up to a full surrender.
Terminal Illness Rider - After the first contract year, if you
are diagnosed by a physician as having a terminal illness (prognosis of
survival is 12 months or less), you may have the option with the Terminal
Illness Rider to withdraw up to 25 percent of the annuity's Account Value
without incurring an early withdrawal charge. There is no additional charge for
this rider, but the withdrawal provision may be used only once over the
duration of the contract.
Death Benefit
In the unfortunate event of the death of the contract owner, the beneficiary
will receive a death benefit from the annuity. In the event of the contract
owner's death before income payments have begun, the beneficiary will be paid a
certain value of that annuity. In some cases, if the spouse is the surviving
joint owner or sole beneficiary, then he or she may succeed to the ownership of
the annuity with all the rights and privileges of the original owner, as
allowed by IRS regulations.
Access to Your Funds
Annuities are designed to accumulate money for retirement and provide their
best possible benefit if left intact, without taking any withdrawals. However,
it's nice to know that you have access to the funds in your annuity if you need
them. Some of our products offer a number of options to withdraw the money in
your annuity, including 10 percent Penalty-Free Withdrawals and First-Year
Credited Interest Withdrawals. Remember that for certain withdrawals,
they may be subject to charges.
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