Grow. Smarter.℠Help Clients' Assets Grow More Efficiently
Prudential Premier® Investment Variable Annuity
Help clients take advantage of investment efficiencies to help grow their assets.
The account value is not guaranteed, can fluctuate, and may lose value.
With Premier Investment, You Can Help Clients:
The hypothetical chart is for illustrative purposes and doesn’t represent any investment. The years to double approximates the impact of a targeted rate of return and does not guarantee or predict how any investment performs. Actual results will vary, fluctuate in value and have no guarantee to double in value.
- Constant 7% annual growth for all three hypothetical accounts
- 2 taxable accounts are taxed at a 24% and a 37% rate at the end of every year
- No withdrawals are taken during chart time period
- Does not account for fees, state taxes or portfolio expenses (all can lower performance)
The tax-deferred account is subject to ordinary income tax when withdrawals eventually are taken (which will reduce the amount of a distribution). Lower maximum tax rates on capital gains and dividends may make the investment returns for the taxable accounts more favorable. Changes in tax rates and tax treatment of investment earnings may impact the comparative results.
It is important to note that the Years to Double example above does not guarantee investment results or function as a predictor of how an investment will perform. It is simply an approximation of the impact a targeted rate of return would have. Investments are subject to fluctuating returns and there can never be a guarantee that any investment will double in value.
- 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. Prudential Annuities does not provide investment advice. The selections you choose together with the client are all dependent on their investment goals and their risk tolerance.
- What happens if clients need access to their money?
There are limitations and restrictions when making withdrawals. Withdrawals or surrenders may be subject to contingent deferred sales charges. Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59½, may be subject to an additional 10% federal income tax penalty, sometimes referred to as an additional income tax. Withdrawals reduce the account value and the living and death benefits proportionately.
- What are some of the other things clients need to consider when investing in this product?
If clients invest in this product through a tax-advantaged retirement plan, such as an IRA, SEP-IRA, Roth IRA, 401(a) plan, or non-ERISA 403(b) plan, they will get no additional tax advantage through the annuity itself. Because there is no additional tax advantage when a variable annuity is purchased through one of these plans, the reasons for purchasing the annuity inside a qualified plan are limited to the ability to elect the Return of Purchase Payments Death Benefit, the opportunity to annuitize the contract, and the various investment options, which might make the annuity an appropriate investment for clients. Clients should consult their tax and financial advisors regarding such features and benefits prior to purchasing this annuity for use with a tax-qualified plan.
- What are some of the other considerations that the clients and I need to think about when they invest in various asset allocation portfolios offered by a variable annuity?
It is important to remember that asset allocation does not ensure a profit or protect against a loss. 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. The value or price of a particular stock or other equity or equity-related security owned by a portfolio could go down and clients could lose money. Additionally, fixed income investments are subject to risk, including credit and interest rate risk. Because of these risks, a subaccount's share value may fluctuate. If interest rates rise, bond prices usually decline. If interest rates decline, bond prices usually increase.
Certain asset allocation portfolios may use leverage, short sales, and derivatives or engage in other speculative practices within their alternative investments. These practices include a high degree of risk and may increase the risk, size, and velocity of investment losses. Although certain alternative strategies seek to reduce risk by attempting to reduce correlation with equity and bond markets, no guarantee can be given that such efforts will be successful. The fees and expenses associated with alternative investments are generally higher than those for traditional investments. Lastly, diversification does not assure against loss in a declining market.
- What do clients need to understand about some of the asset allocation portfolios (subaccounts) that are offered with this product?
Premier Investment offers certain subaccounts that invest in underlying portfolios or invest in other portfolios which are also available in other variable annuity contracts we offer. Those other variable annuity contracts offer certain optional living benefits that utilize a predetermined mathematical formula (the "formula") to manage the guarantees offered in connection with those optional benefits. Clients should be aware that the operation of the formula in those other variable annuity contracts may result in large-scale asset flows into and out of the underlying portfolios through a series of transfers. In addition to increasing the portfolios' expenses, the asset flows may adversely affect performance by:
- requiring the portfolios to purchase or sell securities at inopportune times;
- otherwise limiting the sub-adviser’s ability to fully implement the portfolios’ investment strategies;
- requiring the portfolios to hold a larger portion of their assets in highly liquid securities than they otherwise would hold.
- What else do clients need to consider with the pro-growth fee structure?
Premier Investment was built with an innovative pro-growth fee structure. While most traditional variable annuities (VAs) assess insurance charges daily based on account value, the insurance charge for the Premier Investment is assessed partially on account value and partially on cumulative purchase payments (adjusted for withdrawals). When we refer to the “pro-growth” charge structure, we are illustrating that when compared to most traditional VAs, any growth in the clients' account value will result in an overall insurance charge that represents a smaller percentage of account value (a lower “effective charge”). This is because the portion of the charge based on cumulative purchase payments remains constant. Conversely, if the clients' account value were to decline below cumulative purchase payments (adjusted for withdrawals), this would result in a higher effective charge.
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. Your clients should read the prospectus carefully before investing.
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For Compliance Use Only: 1003624-00003-00