Annuities are investment contracts issued by insurance companies and are generally designed for the accumulation and eventual distribution of retirement assets.1   



Various guarantees may be offered by the insurance company at an additional cost and are subject to the claims paying ability of the issuing company. If the annuity is a “fixed annuity,” the owner’s investment becomes part of the insurance company’s general account. A fixed interest rate, based on the investment performance of the insurance company’s investment portfolio, is declared by the insurance company and is subsequently credited to the annuity account.

A “fixed indexed annuity,” also referred to as an Equity Indexed Annuity, combines the attractive features of tax deferral with returns linked to the percentage growth, if any, in a stock index such as the S&P 500. Fixed Indexed Annuities have certain limitations and restrictions, including withdrawal charges and are intended to be a long-term retirement vehicle.

Fixed indexed annuities offer unique product features including different minimum guarantees, withdrawal privileges, contract options, index options, and index participation rates.2

If the annuity is a “variable annuity,”3 the purchaser’s investment may be invested in one or several of the “subaccounts” available within the annuity. These subaccounts generally consist of a portfolio of stocks or bonds. Subaccounts are managed by professional money managers with their assets kept in separate accounts rather than the general account of the insurance company. Thus, the return is based on the performance of the subaccounts. There is no guaranteed rate of return from the insurance company. Many variable annuities offer a "fixed" subaccount option which is guaranteed by the insurance company with its assets becoming part of the general account. Variable annuities are suitable for long-term investing and investors should consult the prospectus for details on any specific variable annuity.

All annuities offer various distribution options designed to provide investors with a systematic stream of income. A contingent deferred sales charge may be assessed against the contract value of a variable product if the policy is surrendered early. The termination value may be more or less than the amount of the premium payments made to the contract.

Annuities allow investors:

• to defer taxes on the growth of the investment until it is withdrawn or converted into periodic payments (annuitized) for income;

• to provide for the payment of a death benefit to a designated beneficiary (avoiding probate);

• access to professional money managers and the ability to direct one’s own investments within the policy (variable annuities only);

• various asset allocation models and the opportunity to transfer assets at little or no cost between the subaccounts of the policy (variable annuities only);

• fixed returns for specified periods of time, guaranteed by the respective insurance company (fixed accounts only);

• living benefit guarantees and various payout options that can provide income for life.4

The payment of a death benefit is subject to the claims paying ability of the issuing insurance company. VS Associates representatives have access to and may recommend annuities issued by various insurance companies that are not captive or proprietary.

1There may be statutory penalties on early withdrawals from annuities before the age of 59-1/2

2All guarantees are backed by the claims-paying ability of the issuing company. An annuity’s earnings are taxable as ordinary income when withdrawn and, if taken before age 59-1/2, may be subject to a 10% federal tax penalty. During the withdrawal charge period, the annuity’s cash withdrawal value may be worth less than the principal allocation and may further reduce your accumulated value.

3Shares of variable annuity subaccounts are subject to investment risk, including possible loss of principal amount invested, and will fluctuate in value. An investor may ultimately receive more or less than originally invested.

4Guarantees may be offered by the insurance company at additional cost and are subject to the claims paying ability thereof.


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