For many, finding new sources of supplemental retirement income is no longer a luxury but a necessity. Fixed index annuities have become an attractive option to many retirees and pre-retirees as they begin to prepare for the road ahead. North American seeks to provide fixed index annuity solutions that offer you a solid foundation to empower retirement.
The North American Charter Plus 14 flexible premium, fixed index annuity is a 14-year retirement savings plan that offers you growth potential for your retirement assets but also protection from losses due to downside market fluctuations.
Key features include:
- Premium bonus
- Upfront premium bonus to give your retirement savings a jumpstart.
- This premium bonus may vary depending on your initial premium amount when your contract is issued.
- Interest crediting
- Fixed and index account options offer upside potential without downside market risk.
- Liquidity options
- Provides access to your accumulation value when you need it most.
Tax deferral
Tax-deferred growth allows your money to grow faster because you earn interest on dollars that would otherwise be paid in taxes.
Your premium earns interest, the interest compounds within the contract and the money you would have paid in taxes earns interest.
Under current law, annuities grow tax-deferred.
An annuity is not required for tax deferral in qualified plans.
Annuities may be subject to taxation during the income or withdrawal phase.
May avoid probate
By naming a beneficiary, you may minimize the delays, expense, and publicity often associated with probate.
Your designated beneficiary receives death proceeds in either a lump sum or a series of payments.
Death benefit
North American will payout, as the death benefit, the accumulation value to your beneficiary upon the death of the annuitant, or an owner provided no payout option has been elected.
Your beneficiary may choose to receive the payout in either a lump sum or a series of income payments.
If joint annuitants are named, the death benefit will be paid on the death of the second annuitant.
If joint owners are named, the death benefit will be paid on the death of the first owner, unless the sole beneficiary is the owner’s spouse and he or she elects to continue this contract under its spousal continuance provisions.
North American Life Insurance is also an inexpensive way to leave a death benefit to beneficiaries.
Related Reading: How does an annuity work after death?
Lifetime income Through your election of an annuity payout option
A North American annuity can provide you with a guaranteed income stream with the purchase of your tax-deferred annuity.
You have the ability to choose from several different annuity payout options, including life or a specified period.
Once a payout option is elected it cannot be changed and all other rights and benefits under the annuity end.
Research fixed income annuity rates to find the best retirement income plan.
Related Reading: How much money do you need to retire at 55?
Building a foundation
The North American Charter Plus 14 provides a solid foundation for your retirement assets through an immediate premium bonus and a few key contract values to give your savings a boost.
Premium bonus
To get a head start on your retirement savings, North American credits you a premium bonus.
The premium bonus is credited to your accumulation value upon the issue and is applied to the accumulation value when additional premiums are received during the first seven years.
It is important to note that the premium bonus, as part of the full accumulation value, is paid out upon death.
Products that have premium bonuses may offer lower credited interest rates, lower index cap rates, lower participation rates, and/or greater index margins than products that don’t offer a premium bonus.
Over time and under certain scenarios the amount of the premium bonus may be offset by lower credited interest rates, lower index cap rates, lower participation rates, and/or greater index margins.
Contract values
Accumulation value
The accumulation value is 100% of the premium, plus any applicable premium bonus, allocated to the fixed and index accounts, plus any fixed or index account interest earned.
It will be reduced by the amount of any withdrawals, but cannot decrease due to negative index performance.
Research index annuity rates from the top plans in the United States.
Surrender value
The surrender value is the amount that is available at the time of surrender.
The surrender value is equal to the accumulation value, subject to market value adjustment, less applicable surrender charges, premium bonus recapture, and state premium taxes (where applicable).
The minimum surrender value will not be less than 87.5% of all premiums; less any partial surrenders (after market value adjustment, reductions for surrender charges, and premium bonus recapture); accumulated at 1.00%, or otherwise directed by your contract.
The surrender value will never be less than the minimum requirements set forth by state laws, at the time of issue, in the state where the contract is delivered.
Accessing your money
With North American Charter Plus 14, you can access your money in a number of different ways, depending on when it may be needed.
Penalty-free withdrawals
After the first contract anniversary, a penalty-free withdrawal (also known as a penalty-free partial surrender), of up to 10% of the accumulation value may be taken each year.
After the surrender charge period, surrender charges, premium bonus recapture, and a market value adjustment no longer apply to any withdrawals.
Your payout options
Upon annuitization, North American Charter Plus 14 offers a variety of income options to suit the needs of annuitants, from just a certain number of years to a lifetime income option.
Once a payout option is elected, it cannot be changed and all other rights and benefits under the annuity end.
In all states except Florida, by current company practice*, you may receive an income from the accumulation value after the first contract year (without surrender charges, or market value adjustment) if you choose a life income option.
You can also receive an income based on the accumulation value if your annuity has been inforce for at least five years and payments will be over at least a five-year period.
Market value adjustment
Your contract also includes a market value adjustment feature—which may decrease or increase your surrender value depending on the change in the index value of the market value adjustment external index since your annuity purchase.
Due to the mechanics of a market value adjustment, surrender values generally decrease as the market value adjustment external index rises or remains constant.
When the market value adjustment external index decreases enough over time, the surrender value generally increases.
However, the market value adjustment is limited to the surrender charge or the interest credited to the accumulation value.
In California, the market value adjustment is limited to the surrender charge or 0.50% of the accumulation value at the time of surrender.
This adjustment is applied only during the market value adjustment period to surrenders exceeding the applicable penalty-free allowance.
Nursing home confinement waiver
You can withdraw up to 100% of your annuity’s accumulation value without surrender charges, market value adjustment and premium bonus recapture if you are confined to a qualified care facility, for at least 90 consecutive days any time after the first contract year.
You cannot be confined at the time your contract is issued.
This waiver is automatically included with your annuity at no additional charge.
If joint annuitants are named on the annuity, a waiver will apply to the first annuitant who qualifies for the benefit.
Required minimum distribution
Surrender charges, premium bonus recapture, and market value adjustments on any portion of an IRS-required minimum distribution exceeding the available penalty-free withdrawal amount will be waived by current company practice.*
