CALL US: (806) 359 4498 Fax: (806) 359 4499

You guys have cut our health insurance premiums substantially while providing us better coverage. I couldn't have asked for a better deal!
- Mark , Amarillo, TX

I would like to thank you guys for helping me get my auto insured. I now feel protected. Great offering, competitive pricing, excellent service!
- Eddie Foster, Amarillo, TX

David Preston Insurance
5410 S. Bell, Bldg. B,
Ste, 401
Amarillo, TX 79109
Phone: (806) 359 4498
Fax: (806) 359 4499

Annuities

WHAT IS AN ANNUITY?
An annuity is a financial product that either accumulates money or distributes money. Annuities can only be purchased from a commercial insurance company. They are not a banking product, and they are not insured by the F.D.I.C. However, most states have some type of guarantee fund that guarantees the annuities up to certain limits.

There are two basic types of annuities.

  • IMMEDIATE Annuities. Immediate annuities are annuities that start a payout or income immediately (within 12 months).  Much of the time when a person reaches retirement age, the employer/pension plan purchases an immediate annuity from an insurance company to fund and guarantee his retirement income.
  • DEFERRED Annuities.  A person gives the insurance company a sum of money, it earns interest, and the payout is defferred until sometime in the future (usually determined by the customer).

DEFERRED ANNUITIES come in three types.

  • FIXED annuities.  Fixed annuities have a guarantee of principal.  They earn interest.  The interest can be guaranteed for one year only or for a period of years such as 3 yrs, 5yrs, 6yrs, 7yrs.  There are usually surrender charges (early withdrawal penalties) that apply during the guarantee period.  At the end of the guarantee period usually the customer has the right to move his money if he desires.
  •  VARIABLE annuities.  Variable annuities have mutual fund type of accounts in which the customer can choose to invest.  There may be from 15 to 40 different choices in a variable annuity.  A customer can usually reposition his money several times per year if he wants.  The investment accounts are subject to the same types of risks as mutual funds or the stock market.  If properly managed, variable annuities can produce larger returns, but there is no guarantee that they will.
  • EQUITY INDEXED annuities.   At this time, indexed annuities are classified as fixed annuities.  The SEC and NASD are trying to bring these annuities under their jurisdiction.  Whether they will be successful remains to be seen.  Indexed annuities returns are tied to some type of market index (such as S&P 500, Lehman Brothers Bond Index, etc.).  Equity Indexed Annuities (EIAs) have some guarantees, but they have many conditions placed upon those guarantees.  There are many moving parts to an indexed annuity such as participation rate, caps, resets, lock-ins, starting points, ect.  Indexed annuities usually have longer surrender periods and higher surrender charges than fixed annuities.  One of the reasons for longer surrender periods and higher surrender charges is the much higher commissions that are paid to agents.  Most EIAs have been in existence for less then 5 years.  It still is not known if they will out-perform a good fixed or variable annuity.  (My opinion)  EIAs should be approached very carefully by any person wanting to purchase an annuity.

BENEFITS OF ALL ANNUITIES:

  • Earnings are tax-deferred until withdrawn.
  • Beneficiaries are named as they are in life insurance policies.
  • They are the only investment that can GUARANTEE an income for a specific period of time or for life.
  • They can help to lower income taxes.
  • They may help to reduce taxes on Social Security income.

One BENEFIT to our customers is the fact that we are an independent insurance agency. We are not tied to any one insurance company. We always shop the marketplace for our customers to get them the best rates available.

If you are interested in purchasing an annuity, contact us. We will patiently determine what your needs and desires are and help you find an annuity that will be right for you.