Distinct Financial Solutions - Annuities : Article: Annuities

What Is an Annuity?

An annuity is a contract with an insurance company that is funded by the purchaser and designed to generate an income stream in retirement. It is a flexible financial vehicle that can help protect against the risk of living a long time because it provides an option for a lifetime income.

Two advantages of annuities are that the funds accumulate tax deferred and they can be distributed in a variety of ways to the contract owner.

There are many different types of annuities. Immediate annuities are designed to provide income right away, whereas deferred annuities are designed for long-term accumulation. Some annuities offer a guaranteed rate of interest, whereas others do not.

Generally, annuities have contract limitations, fees, and charges, which can include mortality and expense charges, account fees, underlying investment management fees, administrative fees, and charges for optional benefits. Most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. Withdrawals of annuity earnings are taxed as ordinary income and may be subject to surrender charges, plus a 10 percent federal income tax penalty if made prior to age 59 1/2. Withdrawals reduce annuity contract benefits and values. Any guarantees are contingent on the claims-paying ability of the issuing company. Annuities are not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association. For variable annuities, the investment return and principal value of an investment option are not guaranteed. Variable annuity subaccounts fluctuate with changes in market conditions; thus, the principal may be worth more or less than the original amount invested when the annuity is surrendered.

Variable annuities are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor.

This material was written and prepared by Emerald.
© 2010 Emerald

Distinct Financial Solutions is a TX based multiple line insurance agency and Joel Hays is an Agent representing American National Insurance Company and American National Property And Casualty Company. Distinct Financial Solutions and Joel Hays are licensed to sell insurance products in the following states: TX

All products, coverages, and options are not available in all states, and eligibility requirements will apply. Products and services referenced in this website are provided through multiple companies. Each company has financial responsibility only for its own products and services and is not responsible for the products and services provided by the other companies.

Life insurance and annuities are issued through American National Insurance Company, Galveston, Texas.

Personal and commercial lines insurance is issued by American National Property And Casualty Company (ANPAC^®), its subsidiaries or affiliates, including American National General Insurance Company, Pacific Property And Casualty Company (California), American National Lloyds Insurance Company (Texas), American National County Mutual Insurance Company (serviced by ANPAC^®-Texas), and ANPAC^® Louisiana Insurance Company (Louisiana). American National Property And Casualty Company is a subsidiary of American National Insurance Company.

Disability Income products and services are issued by Illinois Mutual Life Insurance Company, Peoria, Illinois.

Securities products and services are offered through Agents who are also Registered Representatives and are distributed by Securities Management and Research, Inc. (SM&R), Member FINRA, SIPC, a broker-dealer subsidiary of American National Insurance Company located at 2450 South Shore Blvd., League City, TX 77573 (281) 334-2469. Please note that Distinct Financial Solutions and SM&R are not affiliated. Securities products are offered by prospectus only, involve investment risks, are subject to market fluctuations and the possible loss of principal.

For more information on the Financial Industry Regulatory Authority (FINRA), you may visit their Web site at www.finra.org.

Investors may obtain more information about the Securities Investor Protection Corporation (SIPC), including the SIPC brochure, by contacting SIPC at 202-371-8300 or visit www.sipc.org.

Tax issues that may be discussed are subject to change and this is for your information only. Discussion of such issues does not constitute tax or legal advice. Please consult your tax advisor, attorney or CPA for guidance on all tax matters.

These brief descriptions of coverages available are for illustrative purposes only, and are not intended as a statement of contract. For actual terms and conditions of coverage provided, refer to your insurance policy, or, for more information about coverage options and availability, talk to your American National agent and eligibility guidelines apply. American National Family of Companies reserves the right to discontinue programs at any time.

This site may have links to other sites, which are not maintained by American National Insurance Company, its subsidiaries or affiliates. Such links do not imply endorsement or approval of these sites or the content therein by American National, its subsidiaries or affiliates.