Retirement Planning Learning Center

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Educate Yourself –Time To Rethink Retirement

The financial markets often present challenging times to those trying to plan for their future. Uncertainties can make it difficult to feel good about retirement strategies. Limited availability of traditional retirement income sources, such as defined benefit pension plans, alongside increased costs of living, whether in the area of healthcare or simply because Americans are living longer, has placed a greater responsibility on Americans to save for their future.

With this greater responsibility comes a need for financial solutions that can help provide a level of protection for retirement savings. Whether your long-term objective is to build a source of guaranteed lifetime income, save for a specific retirement goal or leave a legacy for your loved ones – we are here to help you.

We offer financial vehicles that are effective in providing potential for Accumulation, Growth and Safety of principal in challenging times, and that can help you feel confident about your retirement savings strategies.

Understanding the Basics

Our products may help you reach your long-term financial goals. In exchange for your premium payment, the investment company provides you income, either starting immediately or at some point in the future.

How our Products Work

Most have two phases. First, there’s an accumulation phase, during which you let your money earn interest. This is followed by a distribution or payout phase, during which you receive income. We guarantee that you will receive at least the minimum guaranteed interest credited to your account. Remember that all of these guarantees are backed by the claims-paying ability of the issuing company.

You will defer paying taxes until you actually start to take income.Tax-deferred interest means the money in your account can grow faster.

Your principal and bonus when applicable are never subject to any market index risk. A downturn in the market cannot reduce your account values.

Phase One: Accumulation

The accumulation phase begins as soon as you deposit your funds. Your account can earn a fixed rate of interest that is guaranteed by the investment company or an interest rate based on the growth of an external index or indices.

Phase Two: Distribution

The distribution phase begins when you choose to receive income payments. You can always take income payments in the form of scheduled payments over a period of time, including your lifetime. And many of our products allow you to take income withdrawals as an alternative to a stream of payments. Either way, you can choose from several different payout options based on your personal needs, including options for lifetime income that are guaranteed.

Who’s Who in Such a Transaction

Investment Company:

The investment companies that issue the product(s) also includes ancillary guarantees and benefits. They are also responsible for backing the product guarantees.

Account Owner:

These usually are the same person, but they can be different. The owner makes decisions about the product such as who are the beneficiaries. The account owner is the person whose life expectancy is used to calculate the stream of lifetime income payments.


The beneficiary is the person who receives the account value death benefit. Naming one or more beneficiaries is important because without a beneficiary, the money in your account could be subject to probate.

A death benefit can be paid to your beneficiary without probate in either (1) Lump sum or over a (5) year period.

Understand the Benefits

Our products offer a unique combination of benefits that can help you achieve your long-term goals. No other product offers the tax deferral, indexed interest potential and optional benefits to protect your retirement assets and income. Let’s take a closer look at the three key benefits of our [products: Tax Deferral, Indexed Interest Potential and Protection.

Tax Deferral

Under current federal income tax law, any interest earned in your account is tax-deferred. You don’t have to pay ordinary income taxes on any taxable portion until you begin receiving money from your account. Withdrawals are taxed as ordinary income and if taken prior to age 59½, a 10% federal additional tax may apply. An exclusion might be an in service distribution rollover from a 401k to an IRA within 60 days.

Indexed Interest Potential

Our products provide an opportunity for potential interest growth based on changes in one or more indexes. Because of this potential indexed interest, they provide a tailored potential for accumulation. And since the interest your contract earns is tax-deferred, it may accumulate assets faster. In addition to potential indexed interest, these products can offer you an option to receive fixed interest.


Our products offer you a level of protection you may find reassuring. That protection can benefit you in three separate ways:

  • Accumulation: Your principal and credited interest are protected.
  • Guaranteed Income: You can be protected from the possibility of outliving your assets.
  • Legacy: If you pass away before income payments begin our products may help you provide for loved ones.


Tax Deferral

Product Tax Advantages

During the accumulation phase any interest growth is tax-deferred. If you deposit money into your account with after-tax dollars, you will only pay ordinary income taxes on your earnings – not on your premium payments when you begin withdrawing money. Tax-deferred growth, compounded over time may increase the amount of savings and income generated for your retirement.

Tax deferral is also a benefit of traditional IRAs and 401(k)s. However, our products don’t have any government imposed contribution limits. Because of that, they can often be a good choice if you want to save more than IRAs and 401(k)s allow and still enjoy tax-deferred growth potential.

Purchasing one of our products within a retirement plan that already provides tax deferral results in no additional tax benefit. So use our products to fund a qualified plan based upon features other than tax deferral, such as lifetime income options or the guaranteed death benefit.

Tax-deferred growth, which can compound over time  may increase the amount of savings and income your account generates for your retirement.

Indexed Interest Potential

Another advantage is the opportunity to accumulate interest based on changes in an external index.

Some of our products offer you a choice of indexes rather than just one. In addition to choosing your indexes, you can also determine what portion of your account will be based on each index chosen.

Although an external market index or indexes may affect your values, the account does not directly participate in any stock or equity or bond investments. You are not buying shares of any stock or index fund.

Indexed Interest Potential

When you purchase one of our products, you can allocate its value to one or more chosen indexes. A crediting method is then used (which will be defined later) to track the performance of your index(es). At the end of each contract year the indexed interest is calculated.

If the result is positive, you will automatically receive indexed interest, subject to a participation rate and a possible cap or spread (which will also be defined later). That interest is locked in each year and cannot be lost due to index declines at some point in the future.

If the result is negative, nothing happens – and that can be fantastic news! Although you won’t receive any indexed interest for the year, your account value doesn’t decline.

Factors that influence how Your Account Interest is Calculated

You can often choose the index(es) to which you allocate your account value. You can also choose the crediting method used to track changes in your chosen index(es). Before discussing those crediting method choices, it’s good to look at some other factors that will affect how your indexed interest is calculated.


Some fixed index products set a maximum rate of interest (or cap) that the contract can earn in a specified period (usually a month or year). If the chosen index increase exceeds the cap, the cap is used to calculate your interest.

Participation Rate:

In some products, a participation rate determines how much of the index increase will be used to calculate your indexed interest. (Participation rates are generally applied after caps, and before a spread.)


The indexed interest for some products is determined by subtracting a percentage from any gain the index achieves in a specified period. For example, if the product has a 4% spread and the index increases 10%, the account is credited 6% indexed interest.

Crediting Method Choices

No single crediting method consistently delivers the most interest under all market conditions.

A quick definition of some popular crediting method choices is provided below. For a better understanding of how each crediting method works, talk to us and we are happy to provide you with additional information. Keep in mind that caps, participation rates, and spreads will also enter into the calculation of indexed interest and may reduce the amount of interest credited.

Annual Point-to-Point. This method tracks changes in the market index from one account anniversary to the next and credits interest based on that annual change.

Monthly Sum. With this method, individual monthly increases and decreases in the index values are tracked and added up. Their sum helps determine the indexed interest credited to the account.

Monthly Average. For this method, the individual monthly index values are totaled, and then divided by 12 to find the average. The starting index value is subtracted from the average to determine the amount of positive or negative index change. This amount is divided by the starting value to determine the percentage of interest credited to the account.

The Benefits of Automatic Annual Reset

Annual reset is a common product feature. At the end of each year, your accounts index values are automatically reset. This means this year’s ending value becomes next year’s starting value. Annual reset also locks in any interest your account earned during the year.

Protection Benefits

A third important advantage is the range of guarantees and optional protection benefits available. These benefits allow you to transfer risk to the investment company issuing the product account. These guarantees help protect your assets, your retirement income and your beneficiaries. In exchange for the risk transfer, the benefits may carry an additional cost that will vary by product and company.


Products are subject to surrender charge periods which can vary but are generally between 1 and 12 years in duration in declining order. As long as you abide by the terms of your account you will not lose any of the money you place in your account due to surrender charges. And any interest credited to the contract is locked in and protected.

Guaranteed Income

Our products put you in control of your future income, based on the product chosen and how much money you put into it. After your account has had an opportunity to earn interest over its deferral period, you can begin distribution. You can then receive your account value in a stream of income that will last your lifetime (or longer). The amount of your payments is based on the value of the account on the date you begin distribution and the payout schedule that you choose.

You generally have two choices for receiving income payments: A stream of payments or income withdrawals. Each of these payment types is taxed differently. Our products are not held in a qualified plan such as an IRA or a 401(k); part of each payment stream is a tax-free return of what you paid for the product and part is taxable as interest you earned on the gains. On the other hand, income withdrawals under the same product are fully taxable until the interest you earned has been taxed. Then you withdraw what you paid for the product tax-free. It’s always a good idea to consult with your tax advisor before choosing between a stream of payments and income withdrawals.

Protection With Income That Can Increase

As we noted, our products allow you to convert your account value into a series of fixed-amount payments. Depending on the product you choose, many go beyond this. They offer benefits or optional income riders with payments that can increase to help you keep pace with rising costs throughout your retirement.

Your income payments will be scheduled as withdrawals you can begin anytime after you reach a certain age (often age 60). And with some products, your income payments will be larger if you postpone taking them for a few years.

These income riders or benefits provide a valuable benefit, but they usually come at a small cost. Talk to us about the income options offered by the product you are considering and be sure you understand any costs and restrictions.

Please note that withdrawals may be subject to regular income tax and if taken prior to age 59½, a 10% federal additional tax may apply.

Death Benefit

If you pass away before you begin to receive scheduled income payouts of your accounts value, your beneficiary will receive a death benefit. And in some cases, even if you pass away after you’ve begun to receive income from the account, it’s still possible that your beneficiary will receive a death benefit. Your beneficiary may choose to receive your account values in a single payment or over (5) years.

The death benefit may be a reason some individuals purchase these products even though they have no immediate plans to receive their account values. They simply want to know the money is available (may be subject to a surrender charge) should they need it – and that it can be passed on to their beneficiaries if they don’t use it.

Financial Strength

Because the guarantees in our products are important, it’s important to consider who backs those guarantees. The guarantees are backed solely by the investment company that issues the product. That’s why you should know about the financial strength and stability of the company. Ask about their:

  • Ratings – independent agencies’ opinions of a company’s strength and ability to meet its ongoing obligations.
  • Risk management capabilities – a company’s track record of successfully hedging against potentially extreme market events.
  • Management philosophy – a company’s commitment to stability and reliable, long-term performance.



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