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The money that you put into an annuity will earn interest or receive dividend income or capital gain distributions. These "earnings", unlike money in a savings account, mutual fund, and certificate of deposit are not taxed in the year in which they are earned. Thus the "earnings" will continue to grow and compound tax-free. However the "earnings" when withdrawn are applicable to taxation.
Fixed Annuities
A fixed annuity offers a guaranteed interest rate for a specified time period. Once that time period expires the company will set a new rate, which may be higher or lower than the original rate. This new rate is referred to as a renewal rate. The annuity has a guaranteed minimum interest rate, which is specified in the contract, and at no time may the current or renewal interest rate fall below it.
Insurance Elements of an Annuity
Annuities provide "insurance elements" which can only be found in a product issued by an insurance company.
Death Benefit
Annuities offer a guarantee that in the event of your death your beneficiary will receive at least all the premiums you have paid less any withdrawals you have made regardless of the value of your account.
For information on annuities, please call our office at (908) 245-0226 for current interest rates and plans.
