Are you interested in reducing your taxes, while also benefiting from the growth potential of the stock market?

If so, then you may wish to consider a Variable Annuity.

Variable rate annuities are retirement savings vehicles that combine the benefits of investing in the stock market with the protection options of life insurance.

A variable rate annuity is a contract between an investor and a life insurance company. With a variable annuity, an investment component exists in a managed pool of assets, called a sub-account, that comes with the insurance contract intended to offer various protection features, such as a death benefit, and other available options for an extra charge or fee, often called “riders”. As with a fixed annuity, earnings grow tax-deferred, meaning you don’t have to pay taxes on your gains until you start receiving payments. In exchange for your investment, the insurance company agrees to pay you a stream of income over time, depending on which contract you choose. That stream can start immediately upon payment of a lump sum (with what’s called an immediate annuity) or start at some point in the future (a deferred annuity), and the size of those payments is dependent on the performance of the underlying investment over time. With a variable rate annuity, you have the opportunity to invest in a range of “sub-accounts”. They are professionally managed investments that include a range of securities. You can select the sub-accounts that best reflect your investment needs: growth, income, etc.

A variable rate annuity also allows for transfer privileges enabling you to move your money from one sub-account to another as your goals change from growth to income, for example.

Variable annuities allow you to accumulate assets on a tax-deferred basis, so your earnings benefit from being reinvested and compounding for the life of the contract. All earnings are taxed at withdrawal, rather then when earned.

Many of today’s variable annuities also provide additional protection features for an additional charge, including:

• Guarantee* of your original investment amount to protect your original investment from loss in the event of stock market declines
• Ability to “lock-in” any market gains at a pre-determined time (typically five years from opening the contract)

Variable annuities are long-term, tax-deferred investment vehicles designed for retirement purposes and contain both an investment and insurance component. They are sold only by prospectus. Guarantees are based on claims paying ability of the issuer. Withdrawals made prior to age 59 ½ are subject to 10% IRS penalty tax and surrender charges may apply. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. The investment returns and principal value of the available sub-account portfolios will fluctuate so that the value of an investor’s unit, when redeemed, may be worth more or less than their original value.

To learn more about variable annuities and how they may help you reach your retirement goals, visit any Affinity Bank branch to speak with a Financial Consultant with Investment Services at Affinity Bank.