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Frequently Asked Questions

What is an annuity?

In the broadest terms, an annuity is a contract between you and an insurance company, where you make a premium payment(s) in exchange for the benefits defined in the contract.

Are fixed annuities safe?

Yes. Insurance companies as a whole have a long history of stability, even through our nation’s most difficult economic times. Fixed annuities, unlike variable annuities, are backed by the full faith and credit of the issuing insurance company.

How is my money guaranteed?

With a fixed annuity, your deposited premium and all contract provisions are guaranteed by the issuing insurance company. For that reason, it is prudent to research the financial strength and ratings of the issuing company.

What are the fees?

With fixed annuities, there are no fees, upfront loads or sales charges. 100% of your money goes into your contract without any expense to you. The only time you might experience a fee, is if you choose to add an optional rider that comes with a cost.

What is a Hybrid annuity?

That’s an interesting question. Technically, there is no such thing as a hybrid annuity. But rather, that is an industry coined term to describe a fixed indexed annuity with an optional income rider added to it.

What is a CD-type annuity?

A CD-type annuity is an industry coined term to describe a multi-year guarantee annuity. The interest rate is guaranteed in advance for a set number of years, similar to a bank CD.

What is an Income Rider?

An income rider is an optional benefit that can be added to an indexed annuity contract, usually for a fee. It is designed to help generate a higher level of guaranteed lifetime income at a future date, regardless of the performance of the underlying accounts.

How long do I have to tie up my money?

That depends entirely on the annuity product that you ultimately decide to purchase. Most of the annuities sold by AnnuityAdvantage have 3-10 year surrender terms. However, there are products on the market that have surrender terms as long as 16 years.

Can I use IRA funds to buy an annuity?

Absolutely, this is something we help our clients do all the time.

How are annuities taxed?

If you purchase your annuity with non-qualified funds and leave your interest earnings inside the contract to grow and compound, making no withdrawals, then those interest earnings are tax-deferred. What that means is that you do not have to pay income tax on the interest earnings until you choose to withdraw them.

Is an annuity FDIC insured?

No. Annuities are not guaranteed by any bank or credit union and are not insured by the FDIC or any other federal government agency.

What is a State Guaranty Association?

All insurance products, including annuities, are regulated at the state rather than the federal level. Each state has a Life & Health Insurance Guaranty Association that backs fixed annuity products up to certain dollar limits. To find out the coverage in your state, visit our State Guaranty Associations page.

What’s a free look provision?

Every state requires insurance companies to provide a “free look” period that begins on the date you take delivery of your contract. It is usually a 10 day or longer period of time in which you are afforded the opportunity to review your contract, and have the right to reverse your purchase decision, returning it to the insurance company for a full refund. Think of it as a type of 100% money back guarantee.

Can I withdraw funds from my annuity?

Almost all annuities have some type of penalty free withdrawal provision. The most common being the right to withdraw up to 10% of your account value annually without penalty. That being said, penalty free withdrawal provisions do vary from one annuity to the next, so be sure to understand the details prior to making a purchase decision.

What if I need my money for an emergency?

Many (but not all) annuities have enhanced withdrawal provisions, commonly referred to as living benefits, for certain catastrophic life events such as an extended nursing home stay or terminal illness.

What happens if I die?

Nearly all annuities will pay your named beneficiaries your full account value, without penalty, upon death.

What is an immediate annuity?

A single premium immediate annuity is the oldest known form of annuity contract. It is a product that is designed to provide a guaranteed income stream, most typically for an individual or joint lifetime, with payments beginning in less than one year. Immediate annuities can also be structured to provide guaranteed income for a specified time period.

What’s the difference between a multi-year guaranteed annuity and a Certificate of Deposit (CD)?

Both financial products guarantee a predetermined fixed interest rate for a specified period of time. The most notable differences are that a Certificate of Deposit (CD) is issued by a bank or credit union, while an annuity is issued by an insurance company. Also, when interest earnings are left to grow and compound, they are tax-deferred within an annuity, whereas the CD interest earnings must be reported on you income tax return each year.

How long has AnnuityAdvantage been in business?

AnnuityAdvantage was founded in 1999.

Where are you located?

Our corporate headquarters are located in Medford, Oregon.

How does AnnuityAdvantage get paid?

Our clients incur no fees, sales charges or upfront loads when utilizing our annuity shopping services. However, we do earn commissions paid to us directly from the insurance companies that we place business with.

Where are you licensed?

In all 50 states and the District of Columbia.

Is AnnuityAdvantage an Insurance Company?

No. AnnuityAdvantage is an independent Insurance Agency, contracted with dozens of Insurance Companies to offer their annuity products to our clients.

What is an Exclusion Ratio?

An exclusion ratio is that portion of an annuity income payment, represented as a percentage, which is considered a return of premium (cost basis) and therefore not taxed.

What is a Rate Lock?

If you are transferring money from another financial institution to fund your new annuity purchase, the issuing insurance company will typically allow you to lock-in their current interest rate for up to 45-60 days pending receipt of your transferred funds. When your funds arrive at the insurance company within the time frame allowed, you will receive the locked in rate or the current rate then available, whichever is higher.

What’s the difference between a fixed indexed annuity and a variable annuity?

There are many differences between fixed indexed annuities and variable annuities too numerous to address in this FAQ. But the most significant difference is that your principal is protected with a fixed indexed annuity, whereas with a variable annuity, your funds are subject to market risk.

What does qualified and non-qualified funds mean?

Qualified funds are those contained within a tax qualified account, such as an IRA or 401k. Non-qualified funds are everything else.

What does Life Only mean?

Life Only is one of the many payment options available when structuring an immediate income annuity. If you choose the Life Only payment option, guaranteed income payments will be made to you for as long as you are living and will cease upon your death.

What is a 1035 exchange?

1035 is a section of the tax code that allows for the tax free exchange of non-qualified funds from one annuity contract to another. As long as the money is transferred directly from the old insurance company to the new insurance company, the tax-deferred status of the account remains intact and the 1035 exchange does not create a taxable event.