Annuities
An annuity is a contract between you and an insurance company. You pay the company a sum of money, either all at once or over time, and in return, the company agrees to give you a series of regular payments in the future.
People typically use annuities to create a steady stream of income for retirement, often to supplement other sources like Social Security or a 401(k).
Below is a list of some annuities Verity Underwriting Partners specializes in.
Fixed Annuities
Guaranteed Growth: The interest rate is set for a specific period (e.g., 3-5 years) and is guaranteed. Your money will not lose value due to market downturns.
Predictable Income: When you start receiving payments, the amount is fixed and will not change. This provides a reliable and predictable income stream in retirement.
Safety and Stability: Because the insurance company bears all the investment risk, fixed annuities are considered a very conservative and secure option for retirement savings.
Single Premium Immediate Annuities (SPIA)
Single Premium: Turn a lump sum of money into a stream of guaranteed income that begins almost immediately.
Immediate: The payments to you begin right away, typically within a month to a year after you purchase the contract.
SPIA: The main purpose of a SPIA is to provide a reliable, predictable income stream for retirees, ensuring they don't outlive their savings. The amount of each payment is fixed and determined at the time of purchase, based on factors like your age, gender, the amount you invested, and current interest rates.
Indexed Annuities
Market-Linked Growth: The interest credited to your annuity is tied to the performance of a market index, such as the S&P 500. When the index goes up, your annuity's cash value can grow.
Principal Protection: A key feature is a guaranteed minimum interest rate, often 0%. This means that even if the market index has a negative year, you will not lose your initial investment due to market downturns.
Growth Limitations: In exchange for this downside protection, the amount you can earn is typically limited by a cap (a maximum interest rate) or a participation rate (the percentage of the index's growth you receive).
Lifetime Income Rider
Separate Valuations: When you purchase the annuity, there are two separate "accounts" or values. One is the accumulation value, which is your actual money and what the policy is worth if you were to surrender it. The other is a separate, often hypothetical, benefit base that the insurance company uses only to calculate your future income payments.
Guaranteed Growth: The benefit base typically grows at a guaranteed rate, regardless of market performance. This growth is designed to increase the amount of your future income payments.
Lifetime Payments: When you decide to start taking income (at a predetermined age), the income rider guarantees that you will receive a specific amount of money for the rest of your life, even if your actual accumulation value drops to zero. This protects you from the risk of outliving your savings.
Cost: Income riders come with a fee, which is typically an annual percentage deducted from your accumulation value.
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