The Different Values in Annuities

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Different Values In Annuities

Accumulation Value

The accumulation value, or account value, is the total amount of money in your annuity account at any given point. It’s the sum of your initial investment, subsequent payments, and interest earned. It’s like the balance in your savings account that continues to grow over time. For instance, if you invested $100,000 in an annuity and it grew at 5% per year, your accumulation value after five years would be around $127,628.

Minimum Guaranteed Surrender Value

The minimum guaranteed surrender value is the least amount an insurance company guarantees you’ll receive if you surrender your annuity before its maturity date. This value is usually calculated as a percentage of your premium payments minus any withdrawals or fees. For example, if your annuity contract states a 5% surrender charge and you’ve invested $50,000, your minimum guaranteed surrender value would be $47,500.

Annuity Contract Value: Cash Surrender Value

The cash surrender value is the amount you receive if you cancel your annuity contract before the end of the surrender period. This value equals the accumulation value minus any surrender charges and applicable premium taxes but will never be less than the guaranteed minimum value. If you cash in the annuity early, this is the value you will receive.

Annuity Contract Value: Minimum Guarantee Value

The minimum guarantee value in fixed index annuities is the minimum amount your money is worth, guaranteed at any given time. This value protects your retirement savings during prolonged market downturns, similar to the Great Depression. It ensures that your investment retains a certain value, making a fixed index annuity an insurance product rather than a securities product.

Minimum Guarantee Value is also known as:

  • Minimum Guaranteed Surrender Value
  • Guaranteed Minimum Value
  • Minimum Guarantee Value
  • Minimum Contract Value
  • Minimum Value
  • Minimum Guaranteed Contract Value
  • Minimum Account Value

Annuity Contract Value: Nonforfeiture Value

During the accumulation period, an annuity contract owner who stops paying premiums does not lose the money invested in the annuity. Instead, the contract holder will have nonforfeiture options or rights to cash value accumulation in the annuity.

Bail Out

A bail-out clause allows the annuity owner to give up the contract without paying surrender charges if interest rates drop by a certain amount within a specific period.

Minimum Guaranteed Surrender Value

Annuity Value Adjustments and Benefits

Minimum Guarantee Value

The minimum guarantee value, not to be confused with the minimum guaranteed surrender value, ensures you’ll receive a certain percentage of your original investment, regardless of how the investments within the annuity perform. For example, your minimum guarantee value is 85% on a $100,000 investment. So even if the market tanks and your accumulation value drops to $80,000, you’ll still receive at least $85,000.

Market Value Adjustment

A market value adjustment (MVA) can increase or decrease the surrender value of your annuity, depending on the current interest rates compared to those when you first bought your annuity. For example, if interest rates have risen, you might receive less if you surrender your annuity. Conversely, if rates have fallen, your surrender value may be higher.

Death Benefit Value

The death benefit is paid to your beneficiary if you pass away before annuitizing your contract. This benefit typically equals your accumulation value or the greater of your minimum guaranteed surrender value and the death benefit base.

Income Benefit Value

If you add a guaranteed lifetime income rider to your deferred annuity, your contract may provide an income benefit value. This is the estimated amount of guaranteed lifetime income based on the current interest rates, your age, and other factors.

The Income Benefit Value

An additional value is placed into the annuity contract if you add an income rider to a fixed annuity, fixed index, or variable annuity. This value is called:

  • Income Value
  • Benefit Base
  • Lifetime Income Benefit Value
  • Lifetime Withdrawal Benefit Value
  • Income Benefit Base Value
  • Income Account Value
  • GLWB Value
  • Guaranteed Minimum Withdrawal Benefit Value
  • Guaranteed Lifetime Withdrawal Benefit Value
  • Guaranteed Living Benefit Value
  • Withdrawal Benefit Value
  • Enhanced Withdrawal Benefit Value

This value is separate from the abovementioned values as it only pertains to the income rider on your annuity. The income value is the value your income rider accumulates.

In most cases, the income value is inaccurate, and you can not walk away with the income value.

When you’re ready to turn on your income stream, the insurance company distributes a percentage of the income value to you for retirement.

Annuity Contract Value

How We Can Help

At The Annuity Expert, we understand the complexities of managing annuity values and the stress it can cause. With 15 years of experience as an insurance agency, annuity broker, and retirement planner, we have the expertise to guide you through these financial decisions. We believe in finding the best solutions at the lowest costs, ensuring that your investments are protected and growing steadily.

Many individuals struggle to understand the different values associated with annuities. This confusion can lead to financial uncertainty and stress, especially when trying to secure a stable retirement. We recognize these challenges and are here to help you navigate them with confidence.

Our commitment is to provide personalized advice tailored to your unique needs. Whether you’re concerned about the accumulation value, cash surrender value, or minimum guarantee value, we offer solutions that align with your financial goals. We empower you with knowledge and support, making complex financial concepts simple and actionable.

What Is Accumulation Value In Annuity

What We Recommend

To achieve your desired financial stability and growth, follow these steps:

  1. Contact Us for a Free Consultation: During this initial consultation, we’ll assess your current financial situation and understand your retirement goals. The main benefit of this step is receiving a personalized analysis of your annuity options tailored to your specific needs.
  2. Customized Annuity Plan: Based on the consultation, we will create a customized annuity plan that maximizes your investment growth while providing security against market downturns. This step involves detailed planning and expert advice, ensuring that your investments are optimized for long-term benefits.
  3. Ongoing Support and Monitoring: Once your plan is in place, we offer continuous support and monitoring to ensure your annuity values grow as expected. We provide regular updates and adjustments as needed, giving you peace of mind and confidence in your financial future.

Features and Benefits

  • Personalized Quotes: Tailored to your individual needs, ensuring the best rates and options.
  • Comprehensive Analysis: Detailed assessment of your financial situation for informed decision-making.
  • Expert Guidance: Professional advice from seasoned experts with over 15 years of experience.
  • Continuous Support: Ongoing monitoring and adjustments to keep your investments on track.

Addressing Common Objections

  • Complexity of Annuities: We simplify complex financial terms and concepts, making them easy to understand.
  • Uncertainty in Investment Growth: Our expertise and personalized plans provide a clear path to financial growth and stability.
  • Fear of Losses: Our strategies protect your investments from market downturns, ensuring your money is secure.

By working with us, you will experience peace of mind, financial stability, and the confidence that your retirement is secure. Without our guidance, you may face continued confusion and financial stress, missing out on opportunities to grow and protect your investments.

Take the next step towards a secure financial future. Contact us today for free advice or a quote.

Accumulation Value Vs Protected Income Value

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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