[Narrator] Question: What is a fixed index annuity? Allianz answers.
When it comes to preparing for the future, different types of annuities are designed to do different things.
As one way to help meet your long-term needs for retirement income, a fixed index annuity offers the opportunity for accumulation without the risk of losing money in the market.
[On-screen disclosure] Guarantees are backed by the financial strength and claims-paying ability of the issuing insurer. [End of on-screen disclosure]
With everything else that may figure into your future plans, know that fixed index annuities provide tax deferral, guarantees against the loss of principal due to market downturns, potential for credited interest, and the reassurance of a death benefit for beneficiaries.
[On-screen disclosure] Distributions are subject to ordinary income tax and, if taken prior to age 59½, a 10% federal additional tax. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurer. [End of on-screen disclosure]
So, what else goes on behind the scenes? Let's take a look.
Think about annuities in two phases: accumulation and distribution.
The accumulation phase comes first when you can build your retirement savings and take advantage of the opportunity to grow your money income tax deferred.
The second phase is called distribution or the income phase.
[On-screen disclosure] Distributions are subject to ordinary income tax and, if taken prior to age 59½, a 10% federal additional tax. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurer. [End of on-screen disclosure]
This is when you start receiving money from your annuity, helping you live your retirement the way you want. As you might expect, you'll owe income tax on any taxable portion.
To begin the accumulation phase, you give the insurance company money in one or more payments, which they use to support the benefits of your contract.
During this time, your annuity can earn an annual fixed rate of interest that is guaranteed by the insurance company.
[On-screen disclosure] Although an external index may affect your interest credited, the contract does not directly participate in any equity or fixed income investments. You are not buying shares in an index. [End of on-screen disclosure]
Or if you're seeking additional accumulation potential, you can choose to allocate to an external market index like the S&P 500 Index, where you can earn interest based on positive changes that occur in that external market index.
[On-screen disclosure] With the purchase of any additional-cost riders, the contract's values will be reduced by the cost of the rider. This may result in a loss of principal and interest in any year in which the contract does not earn interest or earns interest in an amount less than the rider charge. This example demonstrates annual crediting. Keep in mind, some contracts may also offer multi-yearcrediting options. [End of on-screen disclosure]
With annual reset, you can lock in the gains your contract receives each year. There are limits to how much you can earn. However, annual reset also benefits you in years when the market is flat or down, protecting your principal and previously credited interest and following any contract year-end with positive allocation performance, it can build value even if your index has not recovered from previous losses.
On the flip side, you can choose different allocation options and death benefit options and defer paying taxes on the interest you earn until you start receiving money from the contract.
[On-screen disclosure] Distributions are subject to ordinary income tax and, if taken prior to age 59½, a 10% federal additional tax. [End of on-screen disclosure]
So it has time to potentially grow. When you're ready to start receiving income from your annuity, you'll need to specify how you want your income distributed.
Don't worry, you won't have to decide until you're ready to start the distribution phase.
[On-screen disclosure] Guarantees are backed by the financial strength and claims-paying ability of the issuing insurer. [End of on-screen disclosure]
When the time comes, there are several ways you can receive the amount allowed by your contract: as a lump sum, over a set period of time, or as an income stream that will last for the rest of your life.
And that's the gist.
So, if you're looking for principal protection from market downturns, tax deferred growth potential, one or more index allocation options to choose from, death benefit options, and guaranteed income for life, it may be worth looking into a fixed index annuity.
For complete information, ask your financial professional if a fixed index annuity is appropriate for your needs. For complete information about fixed index annuities, ask your financial professional for a contract or statement of understanding that outlines the risks, fees, and expenses, as well as other information.
Annuities are designed to meet long-term needs for retirement income. They provide guarantees against the loss of principal and credited interest and the reassurance of a death benefit for beneficiaries.
Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.
[On-screen disclosures]
This content is for general educational purposes only. It is not intended to provide fiduciary, tax, or legal advice and cannot be used to avoid tax penalties; nor is it intended to market, promote, or recommend any tax plan or arrangement. Allianz Life Insurance Company of North America, it's affiliates, and their employees and representatives do not give legal or tax advice. Customers are encouraged to consult with their own legal, tax, and financial professionals for specific advice or product recommendations.
Distributions are subject to ordinary income tax and, if taken prior to age 59½, a 10% federal additional tax.
Products are issued by Allianz Life Insurance Company of North America (Allianz), 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. www.allianzlife.com
• Not FDIC insured • May lose value • No bank or credit union guarantee • Not a deposit • Not insured by any federal government agency or NCUA/NCUSIF
[End of on-screen disclosures]
