When You Receive Income is Up to You
When purchasing a fixed annuity contract, consider when you will want to receive income from your contract.
Fixed annuities have two phases — the build-up phase and the payout phase.
|Deferred Fixed Annuities: Two Phases—the Build-up Phase and the Payout Phase|
Payout Phase (Annuitization)2
There are multiple payout options. You decide which option best suits you.
Fixed Annuity Income Options
The most commonly available fixed annuity income options are:
Death Benefit. Most fixed annuity contracts provide that, if you die before the annuity payments start, the contract value will be paid to your beneficiary. Some contracts provide that the death benefit will be the total premiums paid if that amount is greater than the value of the contract at death.
Terminating the Contract (Surrender Benefit). Most fixed annuities allow you to terminate (surrender) your contract if income payments have not yet started. This is referred to as the surrender benefit, which is equal to your contract value less withdrawal charges, if any.
Making Withdrawals—Without Terminating the Contract
Many fixed annuities allow for free withdrawals up to a specific amount—without terminating the annuity.
Click here to view the Learning about Fixed Annuities Brochure.
Guarantees are subject to the claims-paying ability of the insurance company.
1 Taxes are due upon withdrawal and withdrawals taken prior to age 59½ may be subject to a 10% federal income tax penalty. Contractual withdrawal charge fees may also apply.
2 Annuitization required (the process of converting the fixed annuity into a series of periodic income payments).
Tax-qualified contracts such as IRAs, 401(k)s, etc., are tax deferred regardless of whether or not they are funded with an annuity. If you are considering funding a tax-qualified retirement plan with an annuity, you should know that an annuity does not provide any additional tax-deferred treatment of earnings beyond the treatment by the tax-qualified retirement plan itself. However, annuities do provide other features and benefits such as income options.
Neither The United States Life Insurance Company in the City of New York nor its agents or representatives are authorized to give legal, tax or accounting advice. Please consult your attorney, accountant, or tax advisor.
The Western National series of annuities is issued and underwritten in New York by The United States Life Insurance Company in the City of New York and in all other states by Western National Life Insurance Company.