Things To Consider...

There are many factors that should be considered before investing in an annuity. Some of these include:

1. Surrender Fees: Like fixed deferred annuities, equity-indexed annuities have penalties for early withdrawal called surrender charges. These charges can result in a loss of your principal investment. These charges typically decline over the length of the surrender charge period (typically five to 15 years depending on the company)

2. Tax Consequences: These annuities are also suited for investors with long-term investment horizons. Withdrawals from these annuities can also subject the annuity owner to income taxes, and prior to age 59 1/2, an additional 10% income tax penalty on the distributed amount.

3. Features Vary Among Insurance Companies: There are many companies that are offering these types of annuities, and the methods of calculating the minimum and maximum interest rate vary greatly among them. Although many companies offer a minimum interest rate (typically ranging between 1/5 to 3%), some companies offer minimum interest rates as low oas 0%.

4. Fees and Expenses: Asset management fees will be incurred on these annuities. Maintenance feels, sales commissions, trading costs and other contract charges could also apply. These charges will, in many cases reduce the account value of these annuities.

5. Loans and Early Withdrawals: Although some companies do allow you to ake minimal withdrawals with surrender charges, it is important to remember that some withdrawals can affect the amount of market downside protection provided under the contract.

6. Company Stability and Regulatory Oversight: All annuity features are guaranteed by the claims-paying ability of the issuing company. The guaranteed account value of an equity-index annuity applies only if the annuity is held until the end of the contract term, and that loss of principal is possible if the annuity is surrendered before the end of the contract. Despite the market participation feature, the various state insurance departments regulate these products.

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What Choices do I Have When I Buy an Annuity?

Many people who buy life annuities add one or more of these three options:

1. Joint-and-last-survivor option
   This option appeals to couples. Payments continue as long as either you or your partner lives. Sometimes you can get higher monthly payments while both partners are alive. After one dies, the payments to the surviving partner go down. The thinking is that one person will need less income than two.
2. Guaranteed benefit
   This option guarantees a certain number of payments. For instance, let’s say you choose a 10-year guarantee. What happens if you die before the 10 years are up? Your loved ones or your estate will get the rest of your payments, or they may receive a lump sum of equal value. Of course, if you live past the guarantee period, you will still receive payments for life.
3. Indexed annuity
   This option means your income goes up as prices rise. This is important because after five, 10, or 15 years, your monthly income will buy a lot less than it does today.
4. Choosing the right annuity:
5. Remember: There are lots of options for annuities today.

They may lower the size of your monthly payment, but they may make an annuity work better for you overall. For more information, contact us at Annuity Liberty!

What is a Charitable Remainder Annuity Trust?

Charitable Remainder Annuity Trust or CRAT


Definition

A charitable remainder annuity trust, or CRAT, is a trust with both charitable and noncharitable beneficiaries. Every year for the term of the CRAT, the noncharitable beneficiary receives a payment (the annuity amount) from the trust property. At the end of the trust term, the remaining property passes to the charity. For this reason, the charity's interest is described as a remainder interest.


Prerequisites

• A desire to donate to charity
• A substantial asset to donate to charity


Key Strengths

• Provides income tax deduction
• Provides an income tax haven for assets that have appreciated substantially
• Pays out fixed income every year
• Exists with fairly simple administration
• Reduces potential federal estate tax liability


Key Tradeoffs

• Requires an irrevocable commitment
• Requires the annuity to be paid each year, regardless of whether there is sufficient trust income available
• Inflation may cause CRAT to lose some of its value
• Prohibits the additional contribution of assets


Variations from State to State

• Community property states may affect any gift tax due


How Is It Implemented?

• Consult a legal professional to draft the CRAT
• Select a noncharitable beneficiary, a charitable beneficiary, and a trustee
• Select the assets you want to use to fund the CRAT
• Set the term of the CRAT and establish the annual payment amount

For more information, contact us at Annuity Liberty.

More About our Company

Annuity Liberty is not your ordinary type of insurance agency, we can make a positive difference in your financial future. Since 1996, we have helped thousands of individuals and families achieve their goals, so, they could rest easy. Our competitively priced annuity products give you options to reach your financial goals depending on your needs. You can select from products designed to help you retain wealth, add to your retirement or other savings, supplement your income, and plan for final expenses.

Home based in Fort Lauderdale, FL, our home grown agency has many agents throughout the state of FL, nation and region to give you what most of us want out of life, FINANCIAL FREEDOM. By becoming a client, you not only help secure your financial future, you become a friend.