William Penn Life, 1981 (16. évfolyam, 1-3. szám)

1981-07-01 / 3. szám

ALL ABOUT ANNUITIES Annuities provide protection against living too long just as life insurance protects against dying too soon. And, your WILLIAM PENN ASSOCIATION offers the finest annuities available. Let’s talk for a moment about today’s Deferred Annuity. Here are some questions and answers to help you determine if a por­tion of your overall assets shoudn’t be earning high compound interest rates without erosion by current state and federal in­come taxes. Q. What Is a Simple Definition of an Annuity? A. An annuity is a continuing income. By law an annuity con­tract can be sold only by a life insurance company. An­nuities provide protection which is the opposite of life in­surance. Life insurance normally protects against dying too soon. An annuity protects you against living too long. With all other accumulation vehicles you run the risk of outliving your income. Q. Are Deferred Annuities Safe? A. Yes. An annuity contract is an insurance policy. The life in­surance industry has a record of safety that is unparalled. Your contract values are not subject to market fluctations. They are a contractual obligation of the insurance associa­tion. In this case, the annuity is issued and guaranteed by the William Penn Association. Q. Who is William Penn Association? A. The William Penn Association is a nearly 100 year old frater­nal benefit insurance society, financially sound and profes­sionally staffed. The Association offers a broad range of in­surance products, a unique Fraternal Edge Bonus Program and the fellowship and fun of fraternalism. Best’s Life In­surance Reports, an insurance industry reporting service, gives the WPA one of its highest ratings. Q. What If I Need Money for an Emergency? A. Your cash values are available on demand anytime. Fur­ther, you will never receive less than the amount you have paid in even though you may surrender your contract im­mediately following the purchase date. That's liquidity. Q. What Choices Do I Have at Retirement? A. Several. There is a choice of many lifetime income settle­ment options to meet a variety of financial circumstances. You may also elect an annuity settlement over a designated period of years. Income is payable monthly. Q. Are There Any Tax Advantages? A. Yes, the income is tax-favored in that a portion of each an­nuity payment is considered under the Internal Revenue Code as a partial return of principle. Therefore, annuity in­come is partially tax-exempt to the extent of your cost basis. Q. What Is the Benefit of Tax-Deferral on Interest Earnings? A. Your money accumulates free of income taxes currently. This means that you earn interest on your money normally spent for state and federal income taxes. Therefore, your money accumulates faster during your earning years when earnings and tax rates are normally higher. Q. What If I Need Money While I Am Still In a High Tax Bracket? A. Under current interpretations of the Internal Revenue Code, isolated parital surrenders may be made prior to the annuity date entirely free of income taxes until you have recovered your original principle. This is known as the FIFO (first-in, first-out) accounting method or more explicitly as “Cost Recovery Without income Tax Liability’ ’. This means money is available for emergencies or opportunities prior to annuity payment without interruption of the tax-deferred accumula­tion of the remaining money. Q. Suppose I Need Money Only Temporarily? A. Under a flexible premium annuity, you can increase future payments to offset the money withdrawn. Under a single premium annuity you might want to consider assigning your contract as collateral security for a loan. Banks generally like deferred annuity contracts as collateral, because of the soundness of the collateral, the liquidity, and stable interest rates. The contract becomes more valuable every day. Q. Suppose I Die? A. Should death occur while funds are accumulating, the pro­ceeds are payable to your beneficiary. Such a settlement could bypass the costs, delays and publicity of probate—a further savings in time and money. Q. What About the Interest Rates? A. Currently, by Board direction, the Association is compound­ing interest daily at an effective annual rate of 10%, one of the highest current rates available today. There is no sur­render charge and no administrative fee. The Association intends at all times to pay. a rate of interest which is highly competitive and desirable when compared to other savings institutions. The rate will be subject to increase or decrease however, in no event will the Association pay less than 41/2%. Summarized, the contract is intended to pay a cur­rent competitive rate of interest at all times but cannot pay less than the guaranteed rate. Q. If I Die After Electing an Annuity, Don’t I Lose All My Money? A. Not true. It depends entirely on the option elected. You can enjoy a tax-favored income for life or for a long period of years secure in the knowledge that you will never outlive your income and that, should you die early, your beneficiary can continue to receive income—with the same tax-exempt status you enjoyed. Q. Does This Deferred Annuity Qualify for IRA and IRA Rollover Purchases? A. Yes, the contract meets the requirements of the Internal Revenue Service for such purposes. Q. How about KEOGH or HR-10 Plans? A. The contract can be used in connection with these plans by using an approved prototype plan which the Association has on file with the IRS. Q. If If Don’t Have an IRA Plan, Why Should I Start One? A. Because Uncle Sam allows you to deduct up to $1750 if married and $1500 if single from the top of your income. For example. Suppose you earned just $10,000. You can deduct $1500 from the $10,000 and pay taxes on only $8500. Uncle Sam is paying you to plan for retirement. Q. How Long Might I Live After Retirement? A. The latest mortality studies available show that a male age 65 has a life expectancy of 14 additional years—on the average. A female has an additional life expectancy of 18 years after age 65. That's a lot of years. If you're used to eating 3 meals a day, that’s 15,330 meals to provide for after retirement for a male and 19,710 meals for the female. Annuities make good eating after retirement plans. Want more information? Call or write William Penn Association. 31

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