What to Consider

Immediate or Deferred
Should I choose an immediate or deferred annuity?

Perhaps the first important consideration in buying an annuity is determining whether you need access to your money right now or further down the road. If you have an urgent income need, then you should think about buying an immediate annuity, which offers you a steady stream of income immediately after purchase. If you can wait to draw upon annuity payments later (e.g., as part of your retirement income), then a deferred annuity enables you to receive payments after an elapsed period of time - for example, five, seven, or ten years after purchase. Look at your overall financial situation and current stage of life in making this decision.

Purchase Requirements
Is there a minimum amount required to purchase a contract?

One important aspect to consider when buying an annuity is which type is right for you. Most annuities have minimum Purchase Payments and may or may not allow multiple premiums. Keep in mind that some variable annuities and flexible premium annuities may offer payroll deduction, with minimum Purchase Payment requirements of $50 or less. Others need a single lump sum with certain minimum requirements, depending on the product. Consider what works best for you and meets your retirement needs before choosing.

Interest Rates and Fees
What will my interest rate be on my annuity, and will I have to pay yearly fees?

Different types of annuities offer you different protection and opportunities when it comes to interest rates. Fixed annuities offer you the protection of an interest rate that is fixed and guaranteed never to be below a minimum amount. Variable annuities do not offer that protection, but allow you the opportunity to earn higher interest rates based on the market. Fixed-indexed annuities offer the protection of a fixed rate as well as the potential to earn a higher interest rate based on a referenced index, but with the guarantee that you will never have a negative interest rate.

Generally, fixed and fixed-indexed annuities do not charge up-front sales or administrative fees but may have surrender charges. Variable annuities may require maintenance and administrative fees because of the complexity of the products.

What are the charges for a variable annuity?

A charge to consider when purchasing a variable annuity is the mortality and expense charge. This annual charge is in addition to the surrender charge and is used to pay for the additional risks involved with a variable annuity contract, such as the payments that may be made during the benefit payment period and the guaranteed death benefit.

Another charge to consider is the annual administration charge. This annual charge is used to pay for the expenses incurred in administering the contract and the variable annuity's separate account.

When purchasing a variable annuity, you can find specific information regarding contract charges in the contract's prospectus.

Withdrawals and Loans
What if I need to access some of my money during the accumulation phase?

Annuities are long-term instruments designed to accumulate money for retirement and provide their best possible benefit if left intact, without taking withdrawals. However, it's nice to know that you have access to the funds in your annuity if you need them. Many of the products offered by GAFRI subsidiaries provide a number of options to withdraw the money in your annuity, including 10 percent Penalty-Free Withdrawals and Interest Withdrawals through the Easy Systematic Payment Program. Remember that for certain products withdrawals prior to age 59½ may be subject to restrictions and a 10 percent tax penalty, according to IRS regulations. Also, certain withdrawals may be subject to charges.

Riders
Are there any special features that will protect me if I get sick or need long-term care?

Yes, some of the annuities offered by the insurance subsidiaries of GAFRI may include the following waivers to help ease the strain of unforeseen events:

Extended Care Waiver - An Extended 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 Waiver - 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 Waiver 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 waiver, but the withdrawal provision may be used only once over the duration of the contract.

Death Benefits
What happens if I die before I have begun receiving payments from my annuity?

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, in most cases, the beneficiary will be paid the Account Value (this could vary for some products). If your spouse is the surviving joint owner or sole beneficiary, then he or she may have the right to succeed to the ownership of the annuity with all rights and privileges of the original owner, as allowed by IRS regulations.

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