Annuities

As you prepare for the future, Variable Annuities can be powerful investment tools. They are contracts between you, the investor and an insurance company, and they are one of the few remaining investment vehicles left that combine tax-deferral and opportunities for growth.

Variable Annuities offer you these features:

Professional Management

Your funds are placed in a separate account, established and maintained apart from the insurance company's general investment portfolio. So, the safety of your investment does not depend on the performance of the insurance company's own portfolio.

Furthermore, you're assured that your money is being managed by professionals in the field of money management and with proven performance records. They monitor the securities in each portfolio on a daily basis and then decide on those that show the best potential based on historically strong performance.

Tax-Deferred Accumulation

You have a choice of when to pay taxes. All of your dividends, interest and capital gains are automatically re-invested and compounded, tax-deferred, until you withdraw your money. The taxation is deferred to a later date when, presumably, you will be in a lower tax bracket. Thus, you have the potential for accumulating a larger nest egg because your money has earned interest three ways:

• Your principal earned interest,
• Your interest earned interest,
• The money that you would have paid in taxes earned interest.

Investment Choices

You are able to choose from a variety of investment options, including Growth, Income, Balanced, Global, Money-Market or a Fixed Rate account.

Diversification

Whether you are an aggressive, middle-of-the-road or conservative investor, you can choose the right mix of investment options based on your investment objectives and your current needs. Many investors diversify their contributions among several different types offered within the annuity. In some cases, this can provide a hedge against market fluctuations within any one asset class.

Potential Hedge on Inflation

The investment fund portfolios in a variable annuity have the potential to perform at a higher level than the rate of inflation. You take on more risk when you invest in a variable annuity; however, you are also in a position to earn potentially higher rewards.

Since variable annuities are not financial institution deposits, investment return and principal value will fluctuate so that the value of the surrendered contract may be more or less than the original investment. Thus, investment risk would also include the possible loss of principal.

Guaranteed Death Benefit 

Your family is protected in the event of your death, regardless of market conditions. They are assured of receiving, at the minimum, the original principal investment or the account's value, whichever is greater.

Avoidance of Probate 

The variable annuity proceeds pass directly to your beneficiaries without the delay and the expense of probate. The annuity actually acts like a trust, without the legal fees.

Guaranteed Income for Life

You choose how to receive income payments; in a lump-sum, at regular intervals for a set period of time, or as a guaranteed income stream for the rest of your life, regardless of how long you live!

As you might expect, the strength of any guaranteed income stream depends upon the strength of the company standing behind it.

Flexible, Tax-Free Switching 

You may move your investment allocation from one portfolio to another at any time, without suffering a tax penalty or paying an additional fee. Typically, an investor would experience a gain or a loss in a year where an investment is sold and another is purchased. You may reallocate your investment at any time, as your objectives change.

This feature is especially important for those investors 40-50 years of age who, in addition to retirement, face the more immediate challenges of servicing a mortgage or supporting aging parents.

Reasonable Liquidity

While a variable annuity is a long-term investment opportunity, you always have access to your money. Most variable annuity programs allow you to withdraw 10% of the account value annually. However, when you invest in a variable annuity, you usually commit your investment to a specified amount of time. Therefore, there may be early withdrawal charges if you take out too much money, too soon. In addition, shares are always redeemed at the current net asset value, which may be more or less than their original cost. Normally, if earnings are taken before age 59 1/2, there will be a 10% Federal Government penalty assessed to the earnings.

No Front-End Sales Charge

Your money goes to work immediately. Variable annuities typically have mortality and expense charges of around 1%-2%. These maintenance charges are reasonable and are withdrawn from your account daily, so their impact is relatively minimal. No Insurance Evaluation Since your variable annuity is an investment vehicle, you may purchase it regardless of the state of your health. There is no need to worry about any "pre-existing condition," and you cannot be denied the opportunity to buy.

Qualified Plan Funding

You may also use a variable annuity for an IRA, SEP, TSA, KEOGH, etc., in which case, the initial deposit is minimal. Although qualified plans already offer tax-deferral, variable annuities provide added safeguards.

Easy to Open/Relatively Affordable

You'll discover that a variable annuity is easy to open and very affordable, often requiring only a $1,000 minimum. Additional contributions of as little as $25 a month can be made by check or by electronic transfer.

For a complete discussion of all fees, charges and penalties associated with this product, it is important that you ask for a prospectus and read it carefully before investing or sending money. You can stop in at your First Market Bank branch or call the investments team at 1-804-327-5749 to learn more.