- What is a fixed indexed annuity?
A fixed indexed annuity (FIA) is a tax-deferred financial tool designed for the long term. It offers a level of protection for your clients’ money against loss with the opportunity for it to grow based on the performance of a specific market index, or combination of indices. With a FIA, your clients’ money is not actually invested in any index, but rather may earn interest based on the index’s performance. There may typically be upper limits known as cap rates and participation rates, on the amount of potential interest credited in a given period, as well as a floor that offers downside protection. For complete information about the annuity, please refer to the PruSecure Important Information Disclosure Statement PDF opens in a new window.
- Why does the company behind the annuity matter?
When the time comes for your clients to use the benefits that are offered by an annuity, it is important to remember that all guarantees including the optional benefits are backed by the claims-paying ability of the issuing company.
- Can Prudential help me determine if an annuity is right for my clients?
It's up to you to determine if a fixed indexed annuity is suitable for your clients. Prudential Annuities does not provide investment advice. The selections you choose together with your clients are all dependent on their investment goals and their risk tolerance.
- What happens if my clients need access to their money?
After the 1st contract year, your clients may withdraw up to 10% of the account value (based on the previous contract anniversary, after all index/interest credits are applied) without surrender charges or MVA. If they need more than the Free Withdrawal Amount or want to take a withdrawal in the first year, they can withdraw as much of the account value as they need, but keep in mind that surrender charges and a Market Value Adjustment (MVA) will apply. If they make a full withdrawal of the annuity, they will receive the greater of the account value (minus any surrender charges and adjusted by any applicable MVA) and the Minimum Guaranteed Surrender Value. Also, it’s important to note that if they take a withdrawal or annuitize the contract, taxes will apply. The tax treatment will differ depending on whether they purchased the annuity with pre-tax (qualified) or after-tax (non-qualified) dollars. Your clients should consult a tax advisor for more information.
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 taken during the surrender charge period, excluding any Required Minimum Distributions (RMDs), will be subject to any applicable surrender charges and a Market Value Adjustment (MVA).
- Does PruSecure charge fees?
One of the advantages of PruSecure is that there are no annual contract or administrative fees. However, if your clients withdraw any of their money during the first contract year or more than 10% of their money in any subsequent year during the surrender charge period, there may be a surrender charge. A positive or negative MVA may also apply.
- What are the limitations and restrictions I need to consider?
At the time your clients purchase the contract, they may select a 5- or 7-year surrender charge period, which is the amount of time they must wait until they can withdraw funds from their annuity without facing a penalty charge. Typically, the longer the surrender charge period, the higher the fixed rates and index-based cap rates and participation rates. During this period, if they withdraw any or all of the money from the annuity, surrender charges and a Market Value Adjustment will apply. (See Important Information Disclosure Statement for additional information about MVAs.) In cases where the duration of the index term is shorter than the length of the surrender charge period, your clients may need to renew or reallocate their strategy selections one or more times before the surrender charge period ends. Upon renewal or reallocation, your clients may continue with the same strategy and allocation, or choose from the other strategies and terms available at that time.
It is not possible to invest directly in an index.
All products and/or options may not be available in all states or with all broker/dealers.
Bloomberg Commodity Index reflects changes in a broad range of commodity futures prices, from crude oil and coffee to gold and cattle. Dow Jones® U.S. Real Estate Index is designed to track the performance of Real Estate Investment Trusts (REITs) and other companies that invest directly or indirectly in real estate through development, management, or ownership, including property agencies.
MSCI EAFE (Europe, Australasia, Far East) is a widely accepted benchmark for international stock performance. It is a free float-adjusted market capitalization index that is designed to measure the equity market performance of 21 developed markets, excluding the U.S. and Canada.
S&P 500® Index is a market capitalization-weighted index of the 500 widely held stocks often used as a proxy for the stock market. S&P chooses the member companies for the 500 based on market size, liquidity and industry group representation.
S&P 500® Index and Dow Jones® U.S. Real Estate Index: The “S&P 500® Index” and “Dow Jones® U.S. Real Estate Index” are products of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”), and have been licensed for use by Prudential Annuities Life Assurance Corporation. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Prudential Annuities Life Assurance Corporation’s Product(s) is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index and Dow Jones® U.S. Real Estate Index.
MSCI EAFE Index: The annuity contract referred to herein is not sponsored, promoted or endorsed by MSCI, and MSCI bears no liability with respect to any such annuity contract or any index referred to by any such annuity contract. The Disclosure Statement contains a more detailed description of the limited relationship MSCI has with Prudential Annuities Life Assurance Corporation and any related annuity contracts.
Bloomberg Commodity IndexSM: "Bloomberg®" and "Bloomberg Commodity IndexSM" are service marks of Bloomberg Finance L.P. and its affiliates (collectively, "Bloomberg") and have been licensed for use for certain purposes by Prudential Annuities Life Assurance Corporation. Neither Bloomberg nor UBS Securities LLC and its affiliates (collectively, "UBS") are affiliated with Prudential Annuities Life Assurance Corporation, and Bloomberg and UBS do not approve, endorse, review, or recommend PruSecure Fixed Indexed Annuities. Neither Bloomberg nor UBS guarantees the timeliness, accurateness, or completeness of any data or information relating to Bloomberg Commodity IndexSM.
CDs are FDIC-insured up to $250,000 per financial institution, and there may be a penalty for early withdrawal. Fixed indexed annuities are not FDIC-insured and have limitations and surrender charges.
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