ANNUITIES

A tax-deferred annuity is a contract between you and an insurance company. In exchange for getting your dollars today, the insurance company agrees to pay you an income for a specified period or for your life. Those payments may start at some date in the future or they may start on the day you buy the contract. If the payments are delayed until the future, you have what's called a deferred annuity. If the payments start immediately, you have an immediate annuity.

You pay for an immediate annuity with a lump sum of cash on the day you buy it. You pay for a deferred annuity either with a lump-sum or with a series of payments made over a number of years. Any returns earned will grow untaxed until you receive annuity payments.

Annuities may be attractive for those who:

1. Have contributed the max to their retirement plans and desire further tax-deferral.
2. Will keep it for at least 15 to 20 years.
3. Are in a high tax bracket today but expect to be in a lower tax bracket in retirement.
4. Desire a "guaranteed" income for life in retirement. (Based on company's claims paying ability.)

Tax-deferred annuities come in three flavors: fixed, variable and equity-index.

Fixed Annuities: As the name implies, a fixed annuity provides a minimum, guaranteed rate of return on the investment and a fixed, stable income in its payout phase. A fixed annuity thus provides a steady retirement income.

Variable Annuities: Allows a purchaser to decide how to invest the money within a range of investment options offered by the insurance company. These investments are called "sub-accounts." Thus, like a mutual fund and unlike the fixed annuity, the returns of the variable annuity are not stable, and will vary along with the markets and shares, when redeemed, may be worth more or less than their original investment. While this variability does carry downside risk, it nevertheless affords the annuity buyer the ability to participate in the potentially greater returns of the stock market. As the stock market rises, the growth derived from an investment in a stock sub-account may also grow. Conversely, as the market declines, your investment may decline as well. Still, over the long-term, a variable annuity invested in a stock sub-account may provide a much better opportunity for inflation-protected income than a fixed annuity.

Equity-index Annuity: A recent innovation in the insurance industry, an equity-index annuity is a form of a fixed annuity contract that is tied to a stock index that provides the opportunity to earn returns better than those in a traditional fixed annuity, but less than those of a direct investment in the market itself. While the purchaser has no choice in the investment itself, he or she is able to participate to a degree in stock market gains during a rising market because the insurance company targets a particular index (e.g., the S&P 500 Index). If stocks fall, then the contract guarantees a minimum return, usually 3%. Because of that guarantee, the equity-index annuity has less downward volatility than the variable annuity.

This is not an offer of securities in any jurisdiction, nor is it specifically directed to a resident of any jurisdiction. As with any security, request a prospectus from your registered representative. Read it carefully before you invest or send money. Securities products are limited to residents of GA.

Securities offered through Ameritas Investment Corp. (AIC). Member NASD/SIPC. 5900 O Street, Lincoln, NE 68510. 402-467-6900. AIC and Insuramerica are not affiliated.