Annuities: Annuities: The Whole StoryThe Whole Story

Presented by:

Matthew J. Curfman, CFP®Senior Vice President of Investment Services

Richmond Brothers Financial Management Specialists, Inc.

• David Richmond is a licensed Investment Advisor Representative in the states of Arizona, Colorado, Connecticut, Florida, Iowa, Indiana, Kansas, Maryland, Michigan, Minnesota, North Carolina, Ohio, South Carolina and Texas

• Licensed to sell securities, annuities & insurance

• David Richmond offers securities through Sammons Securities Co.®, LLC, member FINRA/SIPC

• Fee-based investment advisory services offered through Sigma Planning Corporation, a registered investment advisor

Disclosures

• David Richmond offers securities through Sammons Securities Co.®, LLC, member FINRA/SIPC.

• The broker/dealer for Midland National’s variable products is Sammons Securities Co. Sammons Securities Co. is a registered broker/dealer under the Securities Exchange Act of 1934.

• Sammons Securities Co. is an indirect wholly owned subsidiary of Sammons Enterprises, Inc., of Dallas, Texas, the ultimate parent company of Midland National.

Disclosures

• This is not intended to be a sales seminar. The purpose of this Webinar is to provide you with general information on annuities

• There will be an opportunity to schedule an appointment for an individual consultation at the end of this Webinar, which may result in a recommendation of specific financial products that may help you achieve your financial goals

• There is no obligation to schedule an appointment or purchase a product

Disclosures

Agenda

• What annuities are

• Types of annuities

• Payments and fees

• Purpose annuities serve in retirement plan

• Q & A

What Is An Annuity?

• Contract designed to provide payments to holder at specified intervals (usually after retirement)

• Earnings from investments in these accounts grow tax-deferred until withdrawal

• Cannot be withdrawn without penalty until a certain specified age (normally a 10% penalty until you reach age 59 ½)

• Subject to ordinary income taxes in addition to estate taxes

• Relatively conservative, low-yielding investment

• NOT a life insurance policy

Power of Tax Deferral

This is a hypothetical example; rates of return are for illustrative purposes only and are not indicative of any particular investment. Your results will vary and tax savings are not guaranteed.

Different Types of Annuities

Fixed

Indexed

Variable

Immediate Deferred

Fixed Annuity

• Guarantees a stream of fixed payments over the life of the annuity

• The insurer, not the insured, takes the investment risk

• Also known as fixed dollar annuity

All guarantees are subject to the claims paying ability of the issuing insurance company.

Indexed Annuity

• Type of fixed annuity• Provides future payments to the holder (the

annuitant) • Payments are usually at retirement• May earn additional interest based on the

performance of a particular stock index

When Annuity Pays Out

Immediate Deferred

Regular, lifelong payments from insurance company to annuity holder

Payments of income, installments or a lump sum delayed

Two main phases:savings phase income phase

Payments & Fees

• Single Premium• Periodic Level

Premium– Equal premium

amounts at regular intervals

• Periodic Flexible Premium– For deferred annuities– Amount paid can be

varied

•Note: Be aware of additional fees & surrender fees

Payout Options

Life with Cash Refund

Life with Period Certain

Produces largest amount of income but payments stop at death

Creates a payout made for life with guarantees for a set number of years

Provides a lump sum money back guarantee to named beneficiary if total payments are less

than original premium paid

Similar to cash refund annuity, except that the beneficiary continues to receive original premium in monthly installments per original

contract

Used primarily with married couples who want to guarantee annuity payments for

the lives of both individuals

Provides an income benefit for set number of years as part of the retirement plan, with no

life contingency involved

Life with Installment Refund Life Only Annuity

Joint & Survivor Period Certain Only

Purpose of Annuities in Retirement Plans

• Asset management– Help to preserve

principal– Potential higher

returns with downside protection

• Potential income supplement to Social Security & pensions

• Beneficiary protection

Annuity Disclosures

• Some fixed annuities come with high guaranteed interest rates that can decrease after a set number of years to a much lower minimum interest rate determined by law.

• Investors can lose principal if an indexed annuity is terminated prior to the end of the surrender period.

• Some indexed annuities guarantee a minimum interest rate of 0%.• Indexed annuities may not be suitable for all investors. Features such as

participation rates, rate caps, and spread/asset/margin fees may change over time and adversely affect your return if an insurance company subsequently lowers the participation rate or cap or increases the spread/asset/margin fees.

• The principal guarantee and income for life guarantee features of fixed and indexed annuities are subject to the claims-paying ability of the issuing insurance company.

• If you take an early distribution from an annuity, you may be subject to a surrender charge which could result in a loss of principal. You may also be subject to a tax penalty if you make a withdrawal before age 59 ½.

Summary

• No single annuity is best for everyone

• Do your homework

• Research the company’s financial strength

• Discuss possible scenarios with your advisor

• Get everything in writing

Q & A

We welcome your questions at this time.

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