How The Nassau Annuity Grows
You will buy this annuity with a single premium payment. Your premium grows through the interest that is credited to your contract for six years.
Nassau’s fixed annuity very similar to a CD in banking. At the same time, there are critical differences such as tax-deferred growth and liquidity without a penalty.
Nassau can not change the interest until the 6-year term has expired. After the first 6 years, Nassau can change the interest rate.
GUARANTEED INTEREST RATE
The interest rate which is locked in after you apply for the contract is the same as your guaranteed interest rate. The initial interest rate is locked in for the first 6 years. Research 6-year fixed annuity rates.
MINIMUM GUARANTEED INTEREST RATE (MGIR)
For future guarantee periods after the first 6 years, Nassau will never offer a guaranteed interest rate less than the MGIR, which is 1.00%.
Insured Abraham Lincoln
Did you Nassau insured President Abraham Lincoln? Learn more here.
Nassau Fixed Annuity Features
Interest Rate Guarantee Terms
- The interest rate for each guarantee period is set at issue and guaranteed for the duration selected.
- The premium must be held for the full interest rate guarantee period (6 years) in order to receive the full amount of interest.
- At the end of the guarantee period, you have a 30-day window within which to select one of three options:
- Surrender any amount of the contract free of charge
- Renew the contract for another guarantee period of the same duration if available
- Renew the contract for a different interest rate guarantee period available at that time
- If you do not choose one of these options, the contract will renew automatically for the same guarantee period or the nearest available term. (A reminder will be mailed.)
- The interest rate credited for the new guarantee period will be based on the rates in place at that time and declared in advance.
- The interest rate for future guarantee periods will never be less than the minimum guaranteed interest rate of 1%
WITHDRAWALS
- Annual free withdrawals up to 5% are available (if elected at issue) without a surrender charge or market value adjustment (MVA) applied.
- Withdrawals in excess of the annual free withdrawal amount may be subject to a surrender charge prior to the end of the guarantee period and an MVA.
- Withdrawals for Required Minimum Distributions (RMDs) under the contract will not incur surrender charges or MVA after the first calendar year3
- Withdrawals of income will be subject to tax and if prior to age 59½, may be subject to a 10% IRS penalty.
- Withdrawn amounts will not receive the full interest credit
- Surrender charges and MVA will be waived upon contract owner’s death or annuitization after the first contract year
- During the 30-day window period at the end of the guarantee period, you can surrender any amount of the contract without a surrender charge and without the assessment of an MVA
- Nursing home and terminal illness waivers: Surrender charges will also be waived if the owner is admitted into a licensed nursing home or if the owner is diagnosed with a terminal illness that is expected to result in death within six months. Waivers are subject to state approval and certain conditions.
- See contract for details.
What is a multi-year guaranteed annuity or MYGA?
A multi-year guaranteed annuity, or MYGA, is an insurance product that provides guaranteed interest rates for a set period of time. These contracts are typically funded with a single premium payment. The insurer will credit interest to your contract’s value from the date of issue until the end of the guarantee period. They are long-term products, and early withdrawals may be subject to a surrender charge and market value adjustment.
What is the difference between a MYGA and other fixed interest-type products?
There are a number of important differences between MYGAs and other fixed-interest types of products. Various types of financial products may make sense for your needs, and this is not intended to be a comprehensive comparison. What’s important to understand about MYGAs is that they are insurance products issued by an insurance carrier. Their guarantees are backed by the financial strength and claims-paying ability of the issuing company. They are not FDIC insured. Fully review product details before making a purchasing decision.
Who is responsible for the MYGA’s guarantees?
The issuing insurance carrier is responsible for the guarantees. Guarantees are backed by the financial strength and claims-paying ability of the issuing carrier.
Who should consider an MYGA?
Generally, retirees over the age of 60 find the benefits of the product most attractive. Assets in an MYGA are not subject to market fluctuations as they are fixed insurance products. They can be used to generate a predictable stream of income. However, the premium can generally not be withdrawn prior to the end of the guarantee period without incurring a surrender charge and possible market value adjustment. Any consumer should carefully consider his or her financial situation and the potential need for liquidity in the coming years before purchasing an MYGA.
What is the least amount of money I need to buy a MYGA?
Nassau Simple Annuity requires a minimum of $5,000, and Nassau MYAnnuity requires a minimum of a $10,000 premium or transfer of assets to purchase one of Nassau’s MYGA products.
Should I put all of my money in a MYGA?
No. While a MYGA offers competitive interest rates, any premium placed in a MYGA will be subject to surrender charges that decline over time and possibly a market value adjustment. Carefully consider your liquidity needs before purchasing a multi-year guaranteed annuity.
What penalties will I pay if I surrender my entire policy early?
Withdrawals above any free withdrawal amount, including withdrawals of the entire contract value, a.k.a. “surrendering” your contract is generally subject to a surrender charge and market value adjustment. Free withdrawal amounts may vary by product. Keep in mind that any withdrawals will reduce the contract value. Additionally, withdrawals are taxed as ordinary income and, if taken prior to age 59 1/2, a 10% federal tax penalty may also apply. Before making a purchasing decision, it’s important for you to speak with a financial and tax professional to understand exactly how surrender charges, market value adjustments, and taxes apply to your specific annuity contract.
Are there age restrictions to buy a MYGA?
Yes, carriers will generally issue MYGAs to individuals up to age 85.
Can I take penalty-free withdrawals if I get sick?
Some contracts include provisions that will allow you to withdraw some or all of your annuity’s contract value without paying surrender charges if a qualifying event occurs, for example, if you were to suffer from a terminal illness.
What happens at the end of the guarantee period?
At the end of the guarantee period, you usually have the flexibility to continue for another period, based on the original guarantee period, or choose a new period with a different timeline. At the end of each guarantee period, the carrier will typically declare a new interest rate for each new guarantee period. If the carrier receives no direction from you, the carrier will usually automatically renew your annuity for the same period at the then-current interest rate. If you would prefer to withdraw some or all of your contract value at the end of any guarantee period, you will generally have a 30-day window to do so, free of any surrender charge or market value adjustment.
Can I change my mind after I have purchased a MYGA?
You will have at least 10 days (varies by state) to review the contract for your multi-year guaranteed annuity after you buy it. If you decide during that time that you don’t want it, you can return the annuity and get all of your premium back, less any prior withdrawals. Read the cover page of your annuity contract as soon as you receive it to understand how many days you have to decide if you don’t want to keep it.
Who gets the money if I die?
For a single owner, the beneficiary (or beneficiaries) that the owner named on the application will receive the death benefit. For joint owners, the benefit will be paid to the surviving owner. The Internal Revenue Code has distribution at death requirements. These are described in your annuity contract and are based on the death of the owner unless the contract is owned by a trust. If the spouse of a deceased owner is the designated beneficiary, the surviving spouse can continue the contract as the new owner in lieu of receiving the death benefit.
What if I die before the maturity date of the contract?
A death benefit will be paid upon the death of a contract owner or annuitant if the contract is owned by a trust, following the date the company receives a certified death certificate or an order of a court of competent jurisdiction. The death benefit is equal to the greater of the contract value or the guaranteed value as of the date of death. Generally, no surrender charge or market value adjustment will apply.
What if I die after the maturity date of the contract?
If the owner dies on or after the contract maturity date, any remaining annuity payments will be paid to the beneficiary under the payment option in effect on the date of death. Payments may not be deferred or otherwise extended.
How does this affect my taxes?
In general, annuities are tax-deferred, which means you don’t pay taxes on the interest earned until you receive a distribution. When you take a withdrawal or begin receiving income, the distributions are subject to ordinary income tax. Earnings on your contract are taxed at ordinary income tax rates when you withdraw them, and you may have to pay a penalty if you take a withdrawal before age 59½. Buying an annuity within an IRA, 401(k), or other tax-deferred retirement plan doesn’t give you any extra tax benefit. In general, any death benefits paid will be taxable to beneficiaries. Choose the annuity based on its other features and benefits as well as its risks and costs, not its tax benefits. This is only a summary based on current laws and is not intended as tax advice.
Please consult a tax professional regarding your unique situation and for complete tax information.
