ANNUITY


 

IS AN ANNUITY RIGHT FOR YOU?

· Will your pension fall short of providing you with enough retirement income?

· Are you concerned about the future of Social Security?

· Is the idea of tax-deferred earnings attractive to you?

· Do you have money that you want to save for the future?

If you answered yes to any of these questions, an annuity from Erie Family Life may be just right for you. It offers:

· A competitive return on your money

· Safety of principle and interest

· Tax-deferred earnings

· A periodic income you cannot outlive

What is an Annuity?

With an annuity you simply set aside a sum of your money in order to generate a periodic income. There are two phases to an annuity. The accumulation phase is when premium payments accumulate interest earnings. The payout phase is when a sum of money is paid out over a desired benefit period.

Both the accumulation phase and the payout phase of an annuity are extremely flexible. For example, the accumulation phase may consist of a single premium payment or a series of periodic premium payments. Also, the accumulation period may be as short as thirty days, or as long as fifty years or more. The payout period may be for a period as short as five years, or for the entire lifetime of the annuitant.

Whatever your situation calls for, an annuity from Erie Family Life can be tailored to meet your needs.

What are the Tax Advantages?

The interest earned on an annuity is tax-deferred. In other words, you do not pay income tax on the earnings until you begin the payout phase.

The following chart shows how your money would grow if invested in a tax-deferred annuity compared to a certificate of deposit, both earning 6 percent. The example is based on an annual deposit of $2,000 for 30 years, and an assumed income tax bracket of 28%.

Description Value Year 10 Value Year 20 Value Year 30
Tax-Deferred Annuity $27,943 $77,985 $167,603
Certificate of Deposit $25,424 $64,233 $123,471
After-Tax Annuity Value $25,719 $67,349 $137,474

As you can see, the tax-deferred annuity generates substantially more money than the taxable certificate of deposit. If you surrender the annuity and pay tax on the entire gain, the after-tax value of the annuity is still greater than the certificate of deposit.

During the payout phase, either all or a portion of each benefit payment will be taxable. For example, if you select an interest only option, the entire periodic payment is considered interest income and therefore is fully taxable. If you select a lifetime income option for your non-qualified annuity, only a part of each payment is reportable as taxable income.

Certain benefit payments may be subject to a 10 percent federal tax penalty if the policyowner is less than 59½ years old when payments are made. Check with your tax advisor to review your specific situation.

Is the Interest Rate Competitive?

Yes. Erie Family Life has consistently credited a very competitive interest rate to annuity contracts. Erie Family Life's financial condition is extremely strong and allows the company to maintain its competitive standing.

The initial interest rate credited to each premium is guaranteed for one year. After that the credited rate can change to reflect current market conditions. However, under no circumstances may the rate credited fall below 4.5 percent during policy years one through five, 4 percent during policy years six through ten, and 3.5 percent thereafter.

Are There Any Charges or Fees?

Erie Family Life's annuities do not have premium "loads" or annual fees. Such charges only reduce the performance of annuity contracts. The only charge associated with an Erie Family Life annuity is a graded surrender charge, only imposed on partial or complete surrender. Surrender charges are completely waived in the event of death, and are not imposed in calculating settlement options. The surrender charge is a percent of the account value and reduces each year according to the following schedule:                              

Policy Year 1

8%

Policy Year 2

5%

Policy Year 3

3%

Policy Year 4

2%

Policy Year 5

1%

What Settlement Options Are Available?

Erie Family Life offers a variety of settlement options. With careful planning you can design a benefit schedule to meet any need or situation. Some of the more popular options include:

· A Life Annuity - Pays an income for as long as you live.

· A Period Certain Annuity - Pays an income for a specified number of years including a lifetime income.

· Payments of a Fixed Amount - Pays a fixed amount until the account value is exhausted.

· Interest Only - Pays the interest earnings on a periodic basis, thereby preserving the account value.

· A Joint and Survivor Annuity - Pays an income for as long as either you or the joint annuitant is alive.

In the event of death during the benefit payment period, any remaining guaranteed payments are paid according to the original benefit schedule to the designated beneficiary.

 

  

What Makes an Erie Family Life Annuity So Attractive?

· Flexibility of Premium Payments - You can establish a Single Premium Retirement Annuity with a one-time premium payment, or a Flexible Premium Retirement Annuity designed to accept periodic contributions.

· Flexible of Settlement Options - You can select from a variety of settlement options that can be tailored to your situation. You can even select a lifetime income option that provides an income you cannot outlive.

· Optional Waiver of Premium Benefit - This benefit provides for the continuation of annuity premium payments should you become permanently disabled as provided for in the contract.

· No "Front-End" Loads or Expense Charges - The only charge applicable to an Erie Family Life annuity is a graded surrender charge imposed on partial or complete surrender made within the first five years of the contract.

· Proceeds Not Subject to Probate - Proceeds paid to a named person as a result of the annuitant's death are not subject to probate.

· Can be Used to Fund Qualified Retirement Plans - Erie Family Life's annuity products can be used to fund qualified retirement plans such as IRAs. They can also be used to save money on an after-tax basis. In both instances, the interest accumulates tax-deferred.

10 Great Reasons To Buy An Annuity
 

  1. Peace of mind from dealing with a financially secure company.  Erie Family Life has consistently earned an A+ (Superior) rating from the A.M. Best Company.
     
  2. More income at retirement.  Even with Social Security and a private pension, your retirement will be more enjoyable with additional income from an annuity.
     
  3. Assurance of a guaranteed income you cannot outlive. Your funds can be applied to purchase a life annuity which will continue payments for the rest of your life.
     
  4. Flexibility of payout options. In addition to the lifetime annuity, Erie Family Life offers a variety of other income options, including: a lifetime income for both you an your spouse; payments for specific number of years; and regular payments of principal and interest, or interest only.
     
  5. Guaranteed value. As interest is credited to you Erie Family Life annuity, it becomes part of the guaranteed value of the policy.
     
  6. Tax-deferred earnings. During an annuity's "accumulation phase," premium deposits earn tax-deferred interest.  You pay no current income tax on the interest until you begin receiving funds, at which time you may be at a lower taxable income.
     
  7. Competitive rate.  The current interest rate on Erie Family Life annuities is extremely competitive.  The contract also guarantees the rate will not fall below a stated level.
     
  8. No front-end loads or expense charges, and flexible premiums. The only charge on an Erie Family Life annuity is a graded surrender charge imposed on partial or complete surrender within the first five years of the contract. In addition, premium payments can be as small as $20 per month.
     
  9. Ten percent (10%) preferred withdrawal. You are permitted to make one withdrawal per policy year of up to 10% of the account value on the date of the withdrawal without having a surrender charge imposed.
     
  10. Superior service.  The companies of Erie Insurance Group have offered clients superior protection and service since 1925. Erie Family Life, founded in 1967, continues that tradition. Erie Agents are dedicated to maintaining the high ethical standards of the company. You can be certain your Agent from the Peterson Insurance Agency will be conscientious, forthright and thorough.
     

How does your annuity program compare to the Erie Annuity? 
 		  

How does your annuity program compare to the Erie Annuity? 

This information is only intended to provide a general description of Erie Family life's annuity contracts. The contract contains specific details of the coverage's, conditions and provisions. Your ERIE Agent can offer you professional advice and answer any questions you may have before you purchase your annuity. In addition, you may cancel your contract for any reason within ten days after you first receive it and obtain a full refund of any premium paid. Erie Family Life Agents may not be qualified to give legal or tax advice. It is recommended that individuals consult a qualified advisor regarding such matters.

Erie Family Life has consistently earned an A+ (Superior) rating from the A.M. Best Company. This rating signifies competence in underwriting, control of expenses, reserve adequacy and soundness of investments.

For All Your Insurance Needs

Your ERIE Agent offers a full line of life insurance products for your personal needs, including universal life, whole life and level term plans, mortgage insurance plans, and group life plans. In addition, your Agent can provide you with superior protection for your auto, home, business and boat. For more information ask your Erie Agent.