Annuities

Key Points

  • An annuity pays income in retirement, can provide a guaranteed death benefit and generally provides tax deferral
  • The five types of annuities - variable, structured, fixed index, fixed, and immediate - are designed to meet different income needs

An annuity is a long-term insurance product. Many people purchase an annuity to provide a combination of protection through death benefit(s), tax deferral and income in retirement.

Why annuities?

Depending on the type of annuity you may purchase,you may benefit from tax-deferred growth, guaranteed retirement income and/or guaranteed death benefits. 

Each of the five annuity types offers unique benefits for individual retirement income needs:

  • Variable annuities offer the potential for greater income based on market performance. Variable annuities are complex investment vehicles that are subject to market risk, including the potential loss of principal invested.
  • Structured annuities provide opportunities for growth and a level of protection that can help eliminate some of the risk that comes with investing.
  • Fixed index annuities credit interest based on the performance of indexes using a cap or spread.
  • Fixed annuities provide a guaranteed principal* and guaranteed interest, plus generally are tax deferred. 
  • Immediate annuities provide a specific amount of income for the rest of your life or for a specified length of time.

All guarantees are subject to the claims-paying ability of the issuing company. These guarantees do not apply to the investments in variable annuities, which will vary with market conditions.

ANNUITIES: Annuities are not a deposit of any bank or bank affiliate, are not FDIC insured, are not insured by any federal government agency, and are not bank guaranteed. Variable and structured annuities may lose value.
*If you surrender the contract during the surrender period. surrender charges may apply which would could result in a loss of principal. 
Variable annuities are insurance products that are complex long-term investment vehicles and are subject to market risk, including the potential loss of principal invested. Before you invest, be sure to ask your financial professional about the variable annuity's features, benefits, risks and fees, and whether the variable annuity is appropriate for you, based on your financial situation and objectives. 
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.
Contracts and features may not be available in all states, or may vary by state.
There is no guarantee that the annuity will keep up with inflation.
Most annuities have a tax-deferred feature. So do many retirement plans under the Internal Revenue code. As a result, when you use an annuity to fund a retirement plan that is tax-deferred, your annuity will not provide any necessary or additional deferral for that retirement plan. But annuities do have features other than tax deferral that may help you reach your retirement goals. You should consult your tax adviser prior to making a purchase for an explanation of the tax implications to you.
Ameriprise Financial Services, LLC. Member FINRA and SIPC.