An Annuity is a financial product that allows a contractholder to accumulate money on a tax-deferred basis, or receive a series of payments at regular intervals. People purchase annuities to obtain an income or to supplement retirement income they will receive from Social Security, pension benefits, investments and other sources. Immediate annuity contracts provide income payments that normally begin within a year after the premium is paid. Deferred annuity contracts provide income payments that begin later on, often after many years. There are many different types of annuity contracts. Individual contracts cover only one person. Group contracts cover a specific group of people.

Fixed Annuity

With fixed annuities, premiums accumulate at rates of interest set by the company, and the amount of each annuity payment is determined when payments begin. A new type of fixed annuity contract is the indexed annuity. In indexed annuities, accumulation values are based not on the investment experience of the insurance company issuing them, but on the changes in value of a major stock index. Like traditional fixed annuities, the insurance company issuing them guarantees the principal less any withdrawals or surrenders, and the amount of each payment is determined when payments begin.

Deferred annuities are designed for long-term accumulation purposes. Early withdrawals may be subject to surrender charges and if taken prior to age 59 1/2, a 10% federal penalty may apply. Money distributed from the annuity will be taxed as ordinary income in the year the money is received.

National Life Insurance Company and Life Insurance Company of the Southwest, both members of National Life Group, offer various types of annuities, each designed to meet specific personal and business needs and objectives. If you would like more information, please contact us.

National Life Group© is a trade name of National Life Insurance Company and its affiliates. Each company of National Life Group is solely responsible for its own financial condition and contractual obligations. All companies referenced are affiliated unless otherwise noted.