Life Insurance, Why Are Annuities Considered an Insurance Product

Why Are Annuities Considered an Insurance Product?

Annuities are financial vehicles that can be sold only by insurance companies. Basically, an annuity is a contract between you and an
insurance company, which promises to pay you a future income in exchange for the lump-sum payment or premiums that you pay. The
payments specified in the annuity contract will be paid to you during your retirement (or, in some situations, to your beneficiaries after
your death).

Annuities can be used to help ensure a steady stream of income in retirement, as well as to help ensure that your spouse and/or
designated beneficiary will be taken care of in the event of your death. Many types of annuities exist, and most of them include a death
benefit option.

If you elect to annuitize your annuity contract, you are choosing to receive your payments on a schedule that can be based on a single or
joint life expectancy (for you and your spouse, for example) or for a specified period of time. Once you begin receiving payments, most
annuity contracts do not allow money to continue to be made to your beneficiaries, other than your designated joint-life beneficiary, in the
event of your death. However, if you die before annuitization begins, your designated beneficiary typically will receive a death benefit at
least equal to the net premiums paid (original principal deposit or deposits).

Some annuity contracts may offer refunds or guarantees, allowing your beneficiary to receive the remaining amount upon your death (the
accumulated value or premiums paid, whichever is greater).

If you would like to use your annuity to help provide for your beneficiary, make sure to examine the contract closely for specific
beneficiary allowances.

Generally, annuities have contract limitations, fees, and charges, which can include mortality and expense charges, account fees,
underlying investment management fees, administrative fees, and charges for optional benefits. Most annuities have surrender charges
that are assessed during the early years of the contract if the contract owner surrenders the annuity. Withdrawals of annuity earnings are
taxed as ordinary income and may be subject to surrender charges plus a 10 percent federal income tax penalty if made before you
reach age 59 1/2.

Withdrawals reduce annuity contract benefits and values. Any guarantees are contingent on the claims-paying ability of the issuing
insurance company. Annuities are not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they
guaranteed or endorsed by, any bank or savings association. For variable annuities, the investment return and principal value of an
investment option are not guaranteed. Variable annuity subaccounts fluctuate with changes in market conditions; thus the principal may
be worth more or less than the original amount invested when the annuity is surrendered.

Variable annuities are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully
before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your
financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

Note: The information provided here is to assist you in financial planning. The information in this article is not
intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax
penalties. You are encouraged to seek tax or legal advice from a professional and licensed tax or legal advisor.

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