Birdseye Financial Services (360) 722-7889
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Educate Yourself

Protection Benefits
Protection Benefits
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A third important advantage of a fixed index annuity is the range of guarantees and optional protection benefits available. These benefits allow you to transfer risk to the insurance company issuing the fixed index annuity. These guarantees help protect your assets, your retirement income, and your beneficiaries. In exchange for the risk transfer, the benefits may carry an additional cost that will vary by product and company.

Accumulation
Annuities are subject to surrender charge periods which can vary, but are generally between 5 and 10 years in duration. As long as you abide by the terms of your contract, you will not lose any of the money you place in your annuity due to surrender charges. And any interest credited to the contract is locked in and protected as well.

Guaranteed Income
A fixed index annuity puts you in control of your future income, based on the annuity you choose and how much money you put into it. After your contract has had an opportunity to earn interest over its deferral period, you can begin distribution. You can then receive your contract’s values in a stream of income that will last your lifetime (or longer). The amount of your payments is based on the value of the contract on the date you begin distribution and the payout schedule you choose.

You generally have two choices for receiving income payments: annuitization payments or income withdrawals. Each of these payment types is taxed differently. For annuities that are not held in a qualified plan, such as an IRA or a 401(k), part of each annuitization payment is a tax-free return of what you paid for the annuity and part is taxable as interest you earned on the annuity.

On the other hand, income withdrawals under the same annuity are fully taxable until the interest you earned has been taxed. Then you withdraw what you paid for the annuity tax-free. It’s always a good idea to consult with your tax advisor before choosing between annuitization payments and income withdrawals.


Protection With Income That Can Increase
As we noted, a FIA allows you to convert your annuity’s value into a series of fixed-amount payments. Depending on the product you choose, many FIAs go beyond this. They offer benefits or optional income riders with payments that can increase to help you keep pace with rising costs throughout your retirement.

Your income payments will be scheduled as withdrawals you can begin anytime after you reach a certain age (often age 60). And with some FIAs, your income payments will be larger if you postpone taking them for a few years.
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These income riders or benefits provide a valuable benefit, but they usually come at a cost. Talk to us about the income options offered by the FIA you are considering, and be sure you understand any costs and restrictions.

Please note that withdrawals may be subject to regular income tax and, if taken prior to age 59½, a 10% federal additional tax may apply.


Death Benefit
If you pass away before you begin to receive scheduled annuity payouts of the contract’s value, your beneficiary will receive a death benefit. And in some cases, even if you pass away after you’ve begun to receive income from the annuity, it’s still possible your beneficiary will receive a death benefit. Your beneficiary may choose to receive your contract’s values in a single payment or in a series of payments over time.

The death benefit may be a reason some individuals purchase annuities even though they have no immediate plans to receive their contract values. They simply want to know the money is available (may be subject to a surrender charge) should they need it – and that it can be passed on to their beneficiaries if they don’t use it.


Financial Strength
Because the guarantees in an annuity are important, it’s important to consider who backs those guarantees. The guarantees are backed solely by the insurance company that issues the annuity. That’s why you should know about the financial strength and stability of the company. Ask about their:
  • Ratings – independent agencies’ opinions of a company’s strength and ability to meet its ongoing insurance policy and contract obligations.
  • Risk management capabilities – a company’s track record of successfully hedging against potentially extreme market events.
  • Management philosophy – a company’s commitment to stability and reliable, long-term performance.
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Step One
Time to Rethink Retirement
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Step Two
Understand the Basics
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Step Three
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Who's who in an Annuity
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Step Four
Understand the Benefits
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Step Five
Tax Advantages
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Step Six
Index Interest Potential
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Step Seven
Protection Benefits
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Phone 360-722-7889
Fax #425-412-6865
INFO@BIRDSEYEFINANCIAL.COM
Birdseye Financial (MAP)
The contents of this website are for educational purposes only. Any material and its attachments, links, downloads, and/or any emails from our company are not intended to provide legal or tax advice. To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal or state tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. Please seek the advice of appropriately licensed individuals for legal or tax advice relating to your individual situation. Birdseye Financial and its employees are not tax or legal advisors and are not operating in such a manner. Birdseye financial and those working for the company are not licensed Investment Advisors which prohibits us from offering such advice. Any advice you get should be taken as non-investment advice and only educational in nature. Should our clients need a licensed investment advisor, we often work with LifePro Asset Management. *Investing carries an inherent element of risk. No strategy can guarantee a profit or prevent a loss. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary or investment advice. Any illustrations used are hypothetical and were used for explanatory purposes only. THANK YOU!
  • Home
  • About
    • Welcome to Birdseye
    • Who We Are
    • Risk & Portfolio Assessment
    • Request Free Consultation
  • Strategies
    • Key Components
    • Sequence of Returns
    • Rule of 100
    • Tax Strategies >
      • RMD Calculator
      • ROTH IRA
      • Qualified Charitable Donation
      • Business Tax Credit
    • Inflation Impact
    • Educational Webinars >
      • Taxes in Retirement
      • 3 Economic Strategies
      • Five Key Areas of Retirement
    • Video Library
  • Planning
    • Retirement Analysis >
      • Retirement Meeting
      • RA Analysis
    • Social Security >
      • Social Security Webinar
    • Pension Maximization
    • Risk Analysis and Investments
    • LifePro Asset Management
    • Federal Benefits >
      • Federal Benefit Kit
    • Business Tax Credit >
      • Research & Development Tax Credit
      • Employee Retention Tax Credit
      • Resources
  • Insurance
    • Annuities
    • Medicare >
      • Medicare Questionnaire
      • Medicare Meeting
      • Medicare Networks
    • Long-Term Care
    • Life Insurance
    • Final Expense
    • Health Insurance
    • Dental Insurance
    • Vision Insurance
  • Tools
    • Financial News Blog
    • Documentaries
    • Market Index Links
    • Required Minimum Dist (RMD Calculator)
    • Calculators
    • Professional Referrals
    • Bankrate Interest Rates
    • Zillow Home Value
  • Contact
    • Free Consultation
    • Schedule Appointment
    • Online Meeting >
      • Online Meeting Details
    • Secure Upload
    • Retirement Analysis
    • Retirement Portal
    • Rate our Service
    • Referral A Friend