Annuities: The Whole Story

1
Annuities The Whole Story

• Presented by
• Matthew J. Curfman, CFP
• Senior Vice President of Investment Services
• Richmond Brothers Financial Management
  Specialists, Inc.

2
Disclosures

• David Richmond is a licensed Investment Advisor
  Representative in the states of Arizona,
  Colorado, Connecticut, Florida, Iowa, Indiana,
  Kansas, Maryland, Michigan, Minnesota, North
  Carolina, Ohio, South Carolina and Texas
• Licensed to sell securities, annuities
  insurance
• David Richmond offers securities through Sammons
  Securities Co., LLC, member FINRA/SIPC
• Fee-based investment advisory services offered
  through Sigma Planning Corporation, a registered
  investment advisor

3
Disclosures

• David Richmond offers securities through Sammons
  Securities Co., LLC, member FINRA/SIPC.
• The broker/dealer for Midland Nationals variable
  products is Sammons Securities Co. Sammons
  Securities Co. is a registered broker/dealer
  under the Securities Exchange Act of 1934.
• Sammons Securities Co. is an indirect wholly
  owned subsidiary of Sammons Enterprises, Inc., of
  Dallas, Texas, the ultimate parent company of
  Midland National.

4
Disclosures

• This is not intended to be a sales seminar. The
  purpose of this Webinar is to provide you with
  general information on annuities
• There will be an opportunity to schedule an
  appointment for an individual consultation at the
  end of this Webinar, which may result in a
  recommendation of specific financial products
  that may help you achieve your financial goals
• There is no obligation to schedule an appointment
  or purchase a product

5
Agenda

• What annuities are
• Types of annuities
• Payments and fees
• Purpose annuities serve in retirement plan
• Q A

6
What Is An Annuity?

• Contract designed to provide payments to holder
  at specified intervals (usually after
  retirement)
• Earnings from investments in these accounts grow
  tax-deferred until withdrawal
• Cannot be withdrawn without penalty until a
  certain specified age (normally a 10 penalty
  until you reach age 59 ½)
• Subject to ordinary income taxes in addition to
  estate taxes
• Relatively conservative, low-yielding investment
• NOT a life insurance policy

7
Power of Tax Deferral
This is a hypothetical example rates of return
are for illustrative purposes only and are not
indicative of any particular investment. Your
results will vary and tax savings are not
guaranteed.
8
Different Types of Annuities
Indexed
Fixed
Variable
Immediate
Deferred
9
Fixed Annuity

• Guarantees a stream of fixed payments over the
  life of the annuity
• The insurer, not the insured, takes the
  investment risk
• Also known as fixed dollar annuity

All guarantees are subject to the claims paying
ability of the issuing insurance company.
10
Indexed Annuity

• Type of fixed annuity
• Provides future payments to the holder (the
  annuitant)
• Payments are usually at retirement
• May earn additional interest based on the
  performance of a particular stock index

11
When Annuity Pays Out
Immediate Deferred
Regular, lifelong payments from insurance company to annuity holder Payments of income, installments or a lump sum delayed Two main phases savings phase income phase
12
Payments Fees

• Single Premium
• Periodic Level Premium
• Equal premium amounts at regular intervals
• Periodic Flexible Premium
• For deferred annuities
• Amount paid can be varied

• Note Be aware of additional fees surrender
  fees

13
Payout Options
Life with Period Certain
Creates a payout made for life with guarantees
for a set number of years

Joint Survivor
Period Certain Only
Used primarily with married couples who want to
guarantee annuity payments for the lives of both
individuals
Provides an income benefit for set number of
years as part of the retirement plan, with no
life contingency involved

Life Only Annuity
Life with Installment Refund
Similar to cash refund annuity, except that the
beneficiary continues to receive original premium
in monthly installments per original contract
Produces largest amount of income but payments
stop at death
Life with Cash Refund
Provides a lump sum money back guarantee to named
beneficiary if total payments are less than
original premium paid
14
Purpose of Annuities in Retirement Plans

• Asset management
• Help to preserve principal
• Potential higher returns with downside protection
• Potential income supplement to Social Security
  pensions
• Beneficiary protection

15
Annuity Disclosures

• Some fixed annuities come with high guaranteed
  interest rates that can decrease after a set
  number of years to a much lower minimum interest
  rate determined by law.
• Investors can lose principal if an indexed
  annuity is terminated prior to the end of the
  surrender period.
• Some indexed annuities guarantee a minimum
  interest rate of 0.
• Indexed annuities may not be suitable for all
  investors. Features such as participation rates,
  rate caps, and spread/asset/margin fees may
  change over time and adversely affect your return
  if an insurance company subsequently lowers the
  participation rate or cap or increases the
  spread/asset/margin fees.
• The principal guarantee and income for life
  guarantee features of fixed and indexed annuities
  are subject to the claims-paying ability of the
  issuing insurance company.
• If you take an early distribution from an
  annuity, you may be subject to a surrender charge
  which could result in a loss of principal. You
  may also be subject to a tax penalty if you make
  a withdrawal before age 59 ½.

16
Summary

• No single annuity is best for everyone
• Do your homework
• Research the companys financial strength
• Discuss possible scenarios with your advisor
• Get everything in writing

17
Q A

• We welcome your questions at this time.

Type question in chat pane
18
Thank you for joining us!