Generally speaking annuities with a bonus are very complex sophisticated financial instruments and purchasers of these type products should be conversant with and understand the terms, conditions, tax consequences and other implications of owning annuities in their investment portfolios.
Can be either a deductible or non-tax deductible contribution.
Tax deferred growth and generally a taxable distribution.
Some fixed annuities products offer various bonus credits upon purchase.
Typically the amount of credit is related to the size of the initial investment.
Fixed annuities offer a tax deferred fixed rate of return over a client selected time frame and the accounts are guaranteed by the issuing insurance companies.
Generally, fixed annuities are issued for specific time frames which vary from 1 to 10 years, or longer.
Tax-Deferred interest accumulation.
The gains withdrawn from fixed annuities are typically taxable, and withdrawals for owners under age 59 1/2 are additionally subject to an IRS imposed 10% tax penalty.
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Fixed annuities offer preservation of capital.
Fixed annuities offer a guaranteed minimum interest rate; generally first year interest rate enhancement, with future rate adjustments.
Some fixed annuities have some type of liquidity option, others have none.
Generally, annuities liquidated and redeemed prior to the original terms of the offering have some type of withdrawal penalty.
The credit or bonus associated with this product is typically a function of current interest rates.
Typically fixed annuities with bonus have a death benefit.
Typically fixed annuities which pay a credit or bonus have a longer contingent deferred sales charge period should the funds be removed than comparable other type annuities.
Some fixed annuities have a nursing home and disability waiver for penalty free withdrawals.
Fixed annuities are issued by insurance companies and are state specific, what is available for the resident of one state might or might not be available for the resident of another state, and or the terms can be quite different.
The death benefit payable and other payment the owner of an annuity receives is dependent on the claims paying ability of the issuing insurance company.
