What is a Tax-Deferred Annuity? A tax-deferred annuity is a contract between you and the insurance company with guaranteed interest and guaranteed annuity income options. There are no upfront sales charges or administrative fees during the life of your contract.
Advantages of Tax-Deferred Annuities include tax deferral, stability, may avoid probate, liquidity features, and guaranteed income.
One of the primary advantages of deferred annuities is the opportunity to accumulate a substantial sum of money by allowing your premium and interest to grow tax-deferred. Unlike taxable investments, you pay no taxes on your annuity interest until you begin to take withdrawals or receive income. This allows your money to grow faster than in a taxable account, because you earn interest on the money that would have otherwise been paid in taxes.
Your tax-deferred annuity is stable and safe. State insurance department laws require insurance companies establish and maintain reserves equal to the cash surrender value of your annuity contract at all times. In addition, state laws require insurance companies maintain minimum amounts of capital and surplus for further contract...
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