Frequently Asked Questions
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A MYGA is a Single Premium Deferred Annuity primarily intended for customers seeking a long-term retirement savings vehicle. It is suitable for use as an IRA or other qualified account as well as an attractive alternative to CDs or other taxable vehicles.
It’s a tax-free replacement of one insurance policy for another covering the same person.
The accumulation period is the phase in an annuity contract where funds paid into the annuity grow in value.
An annuitant is an individual who is entitled to receive payments from an annuity contract. This individual can be either the holder of the annuity contract or a beneficiary, such as a surviving spouse.
Annuitization is the process of converting the accumulated funds in an annuity into regular, periodic payments after the MYGA matures.
A unit used to describe interest rates; 100 basis points equal 1%.
The designated person to receive the death benefit of an annuity.
The cash value is the amount of money accumulated in the contract. It represents the total of all premiums paid and interest earned, minus any fees or withdrawals.
Interest earned on both the principal amount and previously accumulated interest.
The money paid to a beneficiary upon the annuitant’s or the life insurance policyowner’s death. Death benefit is only paid out if the death benefit rider has been selected.
An annuity where payments begin at a future date chosen by the owner.
A fixed annuity is a type of annuity that guarantees a consistent interest rate and offers stable returns.
A lump sum payment refers to a single, large payment made by the annuitant to fund the annuity, rather than making ongoing contributions within the accumulation period.
The amount paid to purchase the MYGA contract.
An addition to the base policy that adds further benefits.
Optional methods of settlement instead of a lump-sum cash payment.
The surrender value in an annuity is the amount you receive if you terminate the annuity contract early.
This indicates that the interest earnings on your annuity are not taxed until you withdraw them. This allows your annuity to grow in value without the immediate impact of taxes.
During accumulation phase – Interest is credited daily, at the effective annual rate. Interest rates quoted are effective annual interest rates. Due to compounding, any withdrawals made will reduce the actual interest rate realized at the end of the contract year.
The market value adjustment is based on the amount surrendered, withdrawn, or applied to an annuity option reduced by the amount of any remaining free withdrawal amount. The market value adjustment is computed by multiplying the market value adjustment factor by the excess of the surrender amount over the remaining surrender charge free withdrawal amount.
If you purchase this annuity with ‘tax-qualified’ money (like an IRA), tax law and IRS rules may require you to take Required Minimum Distributions (RMD’s) from your contract each year. Please carefully read your annuity’s product disclosure for further information about charges that may apply to your RMDs.
A Surrender Charge is the cost you incur if the contract is surrendered or if any amount withdrawn exceeds the free withdrawal amount during the Surrender Charge period. The Surrender Charge on these amounts is applied at the time of the surrender or withdrawal.
If annuitant’s death occurs after annuity payment begins, and he has opted for the enhanced death benefit rider, following payment will be made to beneficiary upon proper receipt of Proof of Death.
Amount of the Death Benefits equals:
- The Accumulation Value; or
- The Minimum Nonforfeiture Value