All annuities grow Tax Deferred. This mean you are not taxed until you take a distribution.
This is the product we recommend to clients that are invested in Certificates of Deposit. On CDs, every year you receive a 1099 from the financial institution for accumulated interest that you NEVER received. Example: You have a $100,000 CD, paying 2% interest, earns $2,000 in interest, and you get a 1099 for $2,000 on money you never received or used. If you are in a 20% tax bracket, then you are only earning 1.6%. Typically, MYGAs pay a lot higher interest rates than Certificates of Deposit.
Your choice depends on which one accomplishes your goals. The Income Annuity focuses on income accumulation as a priority.
Adding an income rider to the Fixed Index annuity adds another feature to the policy. The investment account is separate from the income account and the growth is separate. Typically, the income account grows much faster than the asset account as it is used for income purposes only. When you die, your beneficiary would receive the funds in the asset account and not the income.
Every individual situation is unique. The life insurance policy has to be tailored to the client’s specific needs and most importantly, accomplish all of their goals and objectives.
We, as financial professionals, are not permitted to offer, and no statement contained herein, shall constitute tax, legal or accounting advice. You should consult a legal or tax professional on such related matters.
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