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Did You Know?

That, as of the first quarter 2011, the combined net assets of U.S. variable annuities were valued at nearly $1.6 trillion, an 11% increase from first quarter 2010 and the highest level ever recorded?
In 2010 fixed annuity assets were valued at $659 billion a 6% increase from 2009?
That in 2010, the total average expense difference between variable annuities and mutual funds was 1.01%?
In 2011, the contribution limits range from $5,000-$6,000 for an IRA, $16,500-$22,000 for a 401(k) and $200,000 plus for a non-qualified annuity?
That the average number of funds per variable annuity contract was 50 in 2010, of which 47% of assets were invested in equities, 11% in bonds, and 20% in fixed-rate accounts?
That the guaranteed lifetime withdrawal benefit was offered on 79% of variable annuities in 2011 and was elected by 65% of contract holders?
Boomers who own annuities have a higher confidence in retirement expectations, with 92% believing they are doing a good job in preparing for retirement?

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High-Level Professional Resources

What types of annuities are available?

02.08.2011

There is a wide variety of annuities available today to meet the specific needs of each individual. With a deferred annuity, assets accumulate tax deferred until distributions are made, usually during retirement; with an immediate annuity, the contract owner converts assets into income and starts receiving payments right away. Fixed annuities accumulate savings or distribute income at guaranteed rates and in guaranteed amounts; variable annuities accumulate savings or distribute income based on the performance of the underlying investment options chosen by the contract owner. Annuities can be part of an IRA, a qualified retirement plan such as a 401(k) or 403(b) (a "qualified" annuity), or purchased with after-tax dollars (a "non-qualified" annuity). The following is a more detailed look at various types of annuities.

Types of Annuities

Deferred

Immediate

Variable

o Purchased either with a single premium or with periodic payments to help save for retirement; the contract owner determines the point at which accumulated principal and earnings are converted into a stream of income.

o The contract value or income payments vary based on the investment performance of underlying subaccounts.

o Purchased with a single lump sum; income payments begin within a short period-less than 13 months.

o The income payments vary based on the investment performance of underlying subaccounts

Fixed

o Guarantees that the contract owner will earn a stated rate of interest during the accumulation phase of a deferred annuity, and receive a defined amount of income on a regular schedule when the contract is annuitized.

o Purchased with a single lump sum; income payments begin within a short period-less than 13 months.

o The income payments are a pre-determined amount on a regular schedule.

Source: Morningstar, Inc., Beacon Research, Cerulli Associates

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