What is a tax-deferred
annuity?
A tax-deferred annuity is a contract between you and the insurance company
with guaranteed interest and guaranteed annuity income options. There
are no up-front fees or administrative fees during the life of your contract.
Advantages of Tax-Deferred Annuities
Tax Deferral
One of the primary advantages of deferred annuities is the opportunity
to accumulate a substantial sum of money by allowing your premium and
interest to grow tax-deferred. Unlike taxable investments, you pay no
taxes on your annuity interest until you begin to take withdrawals or
receive income. This allows your money to grow faster than in a taxable
account, because you earn interest on the money that would have otherwise
been paid in taxes.
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Stability
Your tax-deferred annuity is stable at American Equity Insurance Company.
State insurance department laws require that we establish and maintain
reserves equal to the cash surrender value of your annuity contract at
all times. In addition, state laws require we maintain minimum amounts
of capital and surplus for further contract owner protection.
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May Avoid Probate
In the case of premature death, your beneficiaries will have the accumulated
funds within your annuity available to them, and may avoid the expense,
delay and publicity of probate. Your named beneficiaries can choose to
receive the proceeds as monthly income or a lump sum payment.
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Liquidity
American Equity provides you with opportunities to withdraw funds at
anytime (subject to applicable surrender charges). Most contracts allow,
however, some form of penalty-free withdrawals after the first anniversary.
American Equity also has available certain riders which increase liquidity
in the event of confinement to a nursing home or if diagnosed with a terminal
illness. (Riders not available in all states).
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Guaranteed Income
American Equity Insurance Company can provide you with a guaranteed income
with a tax-deferred annuity. You have the ability to choose from several
different income options, including payments for a specified number of
years; or income for life no matter how long you live. With non-qualified
plans, a portion of each income payment represents return of premium which
is not taxed, thereby reducing your tax liability from your income payments.
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