Frequently Asked Questions - Annuities

Want to learn more about annuities? Below are answers to some of your questions. For more information call us at 1-800-392-3009. Or meet with one of our Financial Advisors at a location near you.

• What is a tax deferred annuity?
• What is a fixed annuity?
• What is a variable annuity?
• How is an annuity funded?
• What are the benefits of Tax Deferral?
• Who should consider an annuity?

What is a tax deferred annuity?
A tax-deferred annuity is an insurance contract . Tax-deferred annuities allow long-term investors to put money away for retirement and provide the possibility of growth while deferring taxes until the time of withdrawal. This type of investment may help you create an income stream for retirement.

What is a fixed annutiy?
If you're nearing retirement and looking for an investment with a guaranteed return this may be the right choice for you. Fixed annuities lock in an interest rate for an period of time, usually one to three years. When the period ends, the insurance company assigns a new rate of return for the ensuing period. Most fixed annuities offer a minimum guaranteed rate that will be paid regardless of economic conditions.

What is a variable annuity?
Variable annuities offer a selection of investment options and unlike a fixed annuity you choose your asset allocation among investment options. If the market conditions change you can change your asset allocation without tax implications. Due to its investment flexibility a variable annuity could provide better protection against inflation than a fixed annuity.

How is an annuity funded?

• Lump sum using existing available funds.
• Make additional contributions at anytime once your account is established.
• Transfer an annuity from another issuer

What are the benefits of Tax Deferral?

• No tax reporting or tax on gains until you begin withdrawing the funds.
• Possible tax-deferred growth until age 85.
• Exchanges among investment options of variable annuities do not trigger a taxable event.

Who should consider an annuity?

• Those who need to save to meet long-term goals.
• Those who prefer to invest in equities may consider a variable annuity.
• Those looking to reduce taxes on existing investments by contributing to a tax-deferred investment.

People's Financial Advisors is a division of People's Securities, Inc. Investments & Insurance are available through People's Securities, Inc. (member FINRA and SIPC), a subsidiary of People's United Bank.