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Today there are many ways to watch your money grow. You can choose traditional passbook savings, certificates of deposit (CDs), money market accounts, or countless others. None of these is as attractive as a Farmers Annuity. Here's why.
The Annuity Advantage
Farmer's annuities feature:
Tax-Favored Interest Accumulation
Annuities are one of the last remaining tax-advantaged vehicles available to accumulate money for the future, whether it's as a supplement to your pension or social security or to fund your individual Retirement Annuity (IRA). This is important because the tax treatment your interest earnings receive can have a profound effect on how fast your money grows as well as when you will have to pay taxes on those interest earnings.
You see, every year you earn interest in a passbook savings or money market account or CD, you pay income taxes on that interest. Annuities accumulate interest free from current taxes. So you pay no taxes on interest until you withdraw your money. This allows your fund to grow at a faster rate than those taxable alternatives.
As an example, if your income puts you in a 36 percent tax bracket, you would need to receive a taxable interest rate of 8.59 percent to equal the accumulation of value of an annuity offering 5.5 percent. When you retire and begin withdrawing your money, you'll probably be in a lower tax bracket, so you'll have more money to spend.
Competitive Interest Rates
Funds deposited in Farmers annuity plans earn a competitive interest rate which vary by the plan you choose. We review these rates every quarter, and while these rates may change, Farmers annuities have historically averaged higher after-tax yields when compared to those taxable vehicles. The guaranteed minimum interest rate is 4 percent.
Penalty-Free Partial Withdrawals
You can withdraw up to 10 percent of your annuity each year*, without penalty, so you'll have extra income in case of an emergency. We do have restrictions to guard against depleting the fund and IRS penalties may apply until you reach the age 59 ½.
*Beginning in the second year under some plans, subject to a small processing fee.
No Probate
Your beneficiary receives the full annuity value without penalty or fee and avoids the expense, delay and frustration of probate.
Lifetime Income Options
You choose what's right for you when it is time to receive payments. You may want to receive the entire annuity value in one lump sum, or guaranteed lifetime payments which offer additional tax advantages and may better suit your financial situation.
Safety of your Annuity
Your principal and interest are guaranteed by contract and backed by the full resources of Farmers New World Life (FNWL). FNWL is required by law to maintain reserves of at least 100 percent of the amount of annuities. These reserves are conservatively invested as required by State Insurance Codes.
FNWL is financially strong and secure. A recognized measure of financial strength of insurance companies is capital ratio, a ratio of a company's surplus to assets. At year-end 1992 FNWL's capital ratio was 26.2 percent, nearly four times the approximate 7 percent industry average.
Farmers Family of Annuity Products
Farmers offers annuity plans which can be tailored to meet your particular needs and finances. Some of our most popular plans require minimum deposits from as low as $50 to $5,000. Subsequent deposits of $50 or more are optional. For your convenience, we'll even draft your checking account or send deposit reminders. Other plans are available for single deposits of $50,000 or more.
At Dunne Insurance, we offer Fixed, Equity Indexed and Variable annuities. If you would like more information on our annuities or if you have any questions, please contact us.
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