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Think of a variable annuity as a personal retirement strategy that can help your money
grow faster today, and make it last longer when you retire. |
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The
Informed
Investor's Guide |
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Variable Annuities Defined (continued)
Benefits of Deferring Taxes
The chart below illustrates just how effective tax deferral can be. A $100,000 initial investment compounded at 8% annually over 30 years grows to $1,006,266 with taxes deferred. Once taxes are paid on the lump-sum distribution, the amount received is $707,198 — still much more than the $478,931 earned on a taxable investment over the same time frame.
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| Assumes hypothetical $100,000 invested year one at 8%, 33% ordinary income tax assessed yearly on taxable investments and at period end on tax-deferred investments. Actual tax rates may vary for different assets and taxpayers (e.g., capital gains and qualified dividend income) from that illustrated. Actual performance of your investment will also vary. Hypothetical returns are not guaranteed and do not represent performance of any particular investment. Hypothetical returns do not include withdrawal charges, mortality and expense risk charges, administrative fees, or other contract charges, which would reduce
performance if they were included. If a withdrawal or distribution is taken before age 59½, a 10% federal tax penalty may apply. |
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This income stream can be guaranteed for a certain period
of time, for your lifetime and the lifetime of your spouse,
or for a combination of the two. Income that you cannot
outlive is a valuable benefit that only annuities provide.
Annuities are offered by life insurance companies because
they provide valuable death benefits and other guarantees.
Death benefits help protect your beneficiaries if you die
before beginning to receive income payments from the
annuity.
In general, an annuity's death benefit ensures that your
loved ones will receive at least the money you have put
into the annuity, less an adjustment for any withdrawals.
Guarantees are subject to the issuing company's claims-paying ability.
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