North Carolina Annuity News

Information On Annuities

Confused About Annuities?
You're not alone. Many people have difficulty understanding them. The main reason for all the confusion: Annuities may be single or flexible-payment; fixed or variable; deferred or immediate. No matter the type, annuities are financial contracts with an insurance company that are designed to be a source of retirement income. This pamphlet will help you decide if an annuity is right for you and help you to choose the type of annuity that best meets your needs.

Single vs. Flexible-Payment Annuities

You can purchase an annuity in two ways:
Make one lump-sum payment to purchase a single-premium annuity. If you want to contribute more money at a later date, you will have to purchase another annuity.
Make ongoing contributions to a flexible-payment annuity. You can contribute money at regular or even irregular intervals anytime you want.

Fixed vs. Variable Annuities

There are two basic types of annuities you can buy-fixed and variable.

Fixed Annuities
Fixed annuities earn a guaranteed rate of interest for a specific time period, such as one, three or five years. Once the guarantee period is over, a new interest rate is set for the next period. This guarantee of both interest and principal makes fixed annuities somewhat similar to Certificates of Deposit (CDs) purchased from a bank. Unlike a typical CD, however, an annuity is not backed by the Federal Deposit Insurance Corporation (FDIC); its security is directly related to the financial health of the insurance company that issues the annuity.

Variable Annuities
Variable annuities typically offer a range of investment or funding options. These funding options may include stocks, bonds and money market instruments. The return on variable annuities can go up or down. Your principal and the return you earn are not guaranteed; they depend on the performance of the underlying investment options. If the funding options you choose for your annuity perform well, they may exceed the inflation rate or fixed annuity returns. If they don't, you may lose not only prior earnings, but even some of your principal.

Contact a North Carolina annuity lawyer today and get a free consultation!

	Did You Know?
	Annuity tax-free exchanges, known as 1035 exchanges Section 1035 of the U.S. tax code allows you to exchange an existing variable annuity contract for a new annuity contract without paying any tax on the income and investment gains in your current variable annuity account. These tax-free exchanges, known as 1035 exchanges, can be useful if another annuity has features that you prefer, such as a larger death benefit, different annuity payout options, or a wider selection of investment choices.