What is a variable annuity?
A variable annuity is a contract with an insurance company. It’s a long-term investment designed for retirement purposes. Clients invest money in professionally managed investment portfolios, where it accumulates tax-deferred. Investment returns and the principal value of an investment will fluctuate so that an investor’s units, when redeemed, may be worth more or less than the original investment. When the client retires, their investment can be used to generate a stream of regular income payments that are guaranteed for as long as they live. In addition, variable annuities may provide a guaranteed death benefit for their beneficiaries. It is important to remember that annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force.
Why does the company behind the annuity matter?
When the time comes for clients to use the benefits that are offered by a variable annuity it is important to remember that all guarantees including the optional benefits are backed by the claims-paying ability of the issuing insurance company and do not apply to the underlying investment options.
Can Prudential help me determine if an annuity is right for clients?
It’s up to you to determine if a variable annuity is suitable for clients. We do not provide tax, accounting, or legal advice. Clients should consult their own independent advisors as to any tax, accounting, or legal statements made herein.The selections you choose together with clients are all dependent on their investment goals and their risk tolerance.
- 1 Income Withdrawals, or income payments, are subject to contract rules.
- 2 If Account Value is reduced to $0 (unless due to Excess Income+), the client will continue to receive the last calculated Annual Income Amount as a guaranteed payment. These guaranteed payments will continue until the client passes away or, if they have a spousal option, until the client and his or her spouse passes away. Since the entire amount of the Annual Income Amount will be paid out each year, they will no longer have the option to carry over any unused portions. However, if the client has any unused Annual Income Amount when the Account Value is reduced to $0, it will be distributed to them in a lump sum before the start of the annuity payments. Please refer them to the prospectus for additional information.
Excess Income: Income Withdrawals in any benefit year – including withdrawals of Required Minimum Distributions (RMDs) – that alone or in combination with other Income Withdrawals exceed the available Annual Income Amount (AIA) and any unused AIA, impact the value of the client’s benefit and can also affect the certainty of their income. If any excess income is taken, only the portion of the excess income that exceeds the remaining AIA will proportionally reduce the Income Base. If the excess income reduces the Account Value to zero, no further amount would be payable, and the benefit and the contract terminate. Please note that any withdrawals made before the first income withdrawal will reduce the Account Value and Income Base by that amount.
All references to guarantees, including optional benefits, are backed by the claims-paying ability of the issuing company and do not apply to the underlying investment options.
Investors should consider the features of the contract and the underlying portfolios’ investment objectives, policies, management, risks, charges and expenses carefully before investing. This and other important information is contained in the prospectus, which can be obtained on the prospectus page or by contacting the National Sales Desk. Clients should read the prospectus carefully before investing.
Variable annuities are issued by Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of New Jersey), Newark, NJ (main office) and distributed by Prudential Annuities Distributors, Inc., Shelton, CT. All are Prudential Financial companies and each is solely responsible for its own financial condition and contractual obligations.
All products and optional benefits may not be available in all states or through all third-party broker/dealers.
Created Exclusively for Use by Financial Professionals. Not for Consumer Use.
For Compliance Use Only: 1024022-00008-00