Intro to flexible premium deferred annuities
An annuity can be a great way to plan for retirement if you want income you won't outlive. And if you don't need income now, a flexible premium deferred annuity offers a way to make premium payments over time and turn that into a guaranteed income stream later in life. Your earnings grow tax-deferred at interest rates guaranteed not to fall below a certain minimum. The minimum purchase payment is only $50 and you have flexibility in how much and how often you pay after that (certain limits apply).
This type of annuity can be a good choice if you plan to buy an annuity over the long term and prefer to do it in smaller payments, instead of making one lump sum payment. To find out what all our choices are, and to get a quote customized for your goals, talk to a COUNTRY Financial® representative.
How it works
A flexible premium deferred annuity requires just a $50 payment to get started.
You can make additional payments to your annuity annually, semi-annually, quarterly or monthly. You can also use our automatic monthly payment plan and we’ll deduct your payment each month from your checking account.
Each payment you make for your annuity will earn an interest rate guaranteed for one year. After that, the interest rate may vary annually, but it won't fall below a guaranteed minimum.
There are two stages to a flexible premium deferred annuity - the accumulation stage, when you're making payments into your annuity, and the payout stage, when you start receiving annuity payments.
During the accumulation stage, your annuity's value grows tax-deferred. If, during this stage, you decide to take a partial or full withdrawal of your money, you can.
However, surrender charges and fees may apply, depending on how long you've owned the annuity and how much money you withdraw, plus you'll pay any income taxes that apply. An additional federal tax penalty may also apply if you take a withdrawal prior to age 59 1/2.
When you first purchase your annuity you select an “annuitization date,” which is the date you start receiving payouts. This date can be changed any time during your accumulation stage.
You can choose to receive payouts monthly, quarterly, semi-annually or annually. Your periodic payout amount will depend on factors like:
- Your annuity's value at the time of annuitization
- Your age
- Payment frequency
- The payout option you choose
You can opt to surrender your contract and take a lump sum payment, or you can choose from a variety of payout options for a guaranteed steady stream of income.
Some common payout options include getting payments for:
- Life only - payments stop at the annuitant's death.
- Life with 10, 15 or 20 years of certain - payments stop at the annuitant's death or at the end of a selected period (10, 15 or 20 years), whichever is later.
- Life with an installment refund - payments stop at the annuitant's death or when the total payouts equal the amount applied under the option, whichever is later.
Another popular choice is to pick an option with your spouse that can continue payments to the surviving spouse after one of you passes away.
Your payout amount will vary based on the payout option you select. If you choose a lifetime payout, partial or full withdrawals of your annuity's value are not allowed once you start taking payouts.
Talk to a COUNTRY Financial representative about the complete list of payout options and the pros and cons of each.
We offer a couple extra benefits for your flexible premium deferred annuity to provide even more security.
Nursing home benefit
Nursing home and extended care facilities can be a big expense. So if you're confined to an eligible facility and need to take a partial withdrawal or end your contract early, we won’t charge you any surrender charges that would normally apply.
Your stay must meet certain requirements to be eligible for this benefit. For example, the stay needs to last at least 30 consecutive days and begin under the direction of your physician. Your contract will give full details on these requirements.
This benefit is included in your annuity contract at no extra cost and is called the Waiver of Surrender Charge for Confinement. Federal tax penalties may apply, depending on age.
Enhanced death benefit rider
As part of your standard annuity contract, if you die during the accumulation stage, your named beneficiary will receive a death benefit based on your annuity's value at the time.
If you choose to add to your standard death benefit with our Enhanced Death Benefit Rider, and you die before you start receiving income payouts, we’ll pay an additional 40 percent of the gain you’ve earned to your beneficiary. This is an option you have to choose when you purchase your annuity. If you choose this, your contract will generally have a lower interest rate.
Availability of the Enhanced Death Benefit varies. This benefit is only available on non-qualified annuities and is not available in all states or if you’re over age 70.
Annuities offer tax-deferred growth, which means you don't pay taxes until the money is paid to you. When you take payouts or make a withdrawal, you pay ordinary income taxes on the portion that represents earned interest (your gain). You'll also be subject to a 10% federal tax penalty on earnings you withdraw before age 59 ½, unless an exception applies.
The taxation of annuities purchased within an IRA or other tax-qualified retirement plan works a little differently. These annuities follow the tax rules that apply to the tax-qualified plan and may vary according to plan type. Buying an annuity within an IRA or other tax-qualified plan doesn't give you any extra tax deferral benefits, so you should choose your annuity based on its other features and benefits as well as its risks and costs. Consult with your tax advisor for information regarding your specific situation.
Annuities issued by COUNTRY Investors Life Assurance Company®, Bloomington, IL. Annuities are not available in all states.
The information and descriptions contained here are not intended to be complete contract descriptions. Annuity contracts contain exclusions, limitations, charges and terms for keeping them in force. Contact your financial representative for costs and complete details.
Guarantees based on the claims paying ability of COUNTRY Investors Life Assurance Company.
COUNTRY Financial and our representatives cannot give tax advice. Any information we provide reflects our understanding of current tax laws, which are subject to change and reinterpretation. See your tax advisor regarding your personal circumstances.
Contract form numbers: CI-FPDA-03B, EDB(09/06), CI-EDB-02