How To Read an Annuity Statement

What Is An Annuity Statement?

An annuity statement is a report created by your annuity company that tracks the performance of your annuity over time. It includes updates on your account balance and the interest or dividends you’ve earned. This information is crucial for tax purposes and for making informed decisions about your financial future.

What You’ll Find On an Annuity Statement

Your annuity statement usually includes the following key components:

1. Account Value (AV)

This is the current value of your annuity contract before any surrender charges or fees. For fixed indexed annuities, this may include credited interest, but not income rider bonuses or market value adjustments.

2. Accumulation Value

This is sometimes the same as the account value. It’s the amount your contract is growing based on the crediting method. In bonus annuities, this might include vesting schedules and bonus amounts that aren’t accessible yet.

3. Surrender Value (or Cash Surrender Value)

This is the amount you’d receive if you cashed out the annuity today. It reflects the account value minus any surrender charges, market value adjustments (MVA), or other penalties.

4. Benefit Base or Income Base

If you added a Guaranteed Lifetime Withdrawal Benefit (GLWB), the benefit base is the fictitious value used to calculate future income—not money you can withdraw. It may grow annually by a guaranteed percentage or based on contract terms.

5. Income Withdrawals

Shows any withdrawals you’ve taken for income. If you’re using a GLWB rider, it will show how much income you’ve drawn and what your remaining guaranteed income is.

6. Fixed Account and Index Options

The statement will show whether your annuity is earning interest through the 1-Year Fixed Account or through indexed crediting methods. Index allocations, participation rates, and caps (if applicable) are often listed here.

7. Surrender Charge Schedule

You’ll see how many years remain in your surrender period and what percentage penalty would apply if you withdraw more than the penalty-free amount.

8. Premium Payments and Transfers

Displays the premium(s) you’ve contributed and any reallocation of funds between fixed and indexed strategies.

Things to Look Out For

• Rider Fees: If you added an income or long-term care rider, the fee will be deducted annually. Look at how it impacts your growth.
• Penalty-Free Withdrawals: Most annuities allow 10% per year after the first contract anniversary. Check if you’ve used your allowance.
• Market Value Adjustment (MVA): If applicable, this can increase or reduce your surrender value depending on interest rate changes.
• Death Benefit: Confirm how the death benefit is calculated and whether spousal continuation is available.
• Guaranteed Values vs. Non-Guaranteed Projections: Many statements project future values based on non-guaranteed assumptions. Focus on the guaranteed side when making decisions.

After the Surrender Period Ends

Once the surrender schedule ends, you can withdraw the full account value with no penalties. Some people use this as a time to start lifetime income, reinvest, or roll into another annuity with better terms.

If you don’t annuitize or take income, your annuity continues growing tax-deferred. The fixed or indexed interest strategy continues until maturity, which can be decades later.

Why It’s Important To Review Your Statement With a Broker

Annuity statements are full of numbers, but they don’t tell you whether your annuity is the best fit for your goals. A broker can explain:

• If your GLWB is on track to meet your income goals
• Whether your interest credits are competitive
• If your annuity includes outdated or underperforming index options
• Whether you’re still paying high rider fees you no longer need

Final Tip

If you’re not sure what your statement means—or if you suspect your annuity isn’t working as intended—get a second opinion. Comparing your contract to other annuities can reveal better growth options, higher income payouts, or lower costs.

We’ll break it down for you and help you understand your options. It’s free, with no pressure.

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