This is a hypothetical example for illustrative purposes only. It does not reﬂect a specific annuity, an actual account value or the performance of any investment.
Withdrawals in excess of the Annual Income Amount impact the value of your benefit and can also affect the certainty of your income. An excess withdrawal occurs when your cumulative Lifetime Withdrawals exceed your Annual Income Amount in any annuity year. If an excess withdrawal is taken, only the portion of the Lifetime Withdrawal that exceeds the remaining Annual Income Amount will proportionally and permanently reduce your Protected Withdrawal Value and your Annual Income Amount for future years. If an excess withdrawal reduces the account value to zero, no further amount would be payable and the contract terminates.
The Account Value is separate from the Protected Withdrawal Value and is not guaranteed. The account value is not guaranteed, can fluctuate, and may lose value.
Talk to Your Financial Professional About Adding a Variable Annuity to Your Retirement Income Strategy.
- 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. You 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 you retire, your investment can be used to generate a stream of regular income payments that are guaranteed for as long as you live. In addition, variable annuities may provide a guaranteed death benefit for your 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 you 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.
- Who can help me determine if an annuity is right for me?
Your financial professional can help you determine if a variable annuity is suitable for you. Prudential Annuities and its distributors and representatives do not provide tax, accounting, or legal advice. Please consult your own attorney or accountant when making important investment decisions.
Prudential Annuities does not provide investment advice. The selections you choose together with your financial professional are all dependent on your investment goals and your risk tolerance.
- What happens if I need access to my 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 is the Protected Withdrawal Value?
The Protected Withdrawal Value is only used to calculate the initial guaranteed lifetime income and the charge for the benefit. It is separate from the account value and is not available as a lump sum withdrawal. The account value is not guaranteed, can fluctuate, and may lose value.
- What are the costs associated with purchasing this product?
Prudential Premier Retirement Variable Annuity is offered at an annual cost of 0.55% to 1.95% for mortality expense and administration fees, with additional fees related to the professional investment options. The fees will vary depending on the underlying annuity and investment options selected. If you choose an optional benefit, additional fees apply. These fees are based on the greater of the account value and the Protected Withdrawal Value and are as follows: Highest Daily- 1.00%; Spousal Highest Daily - 1.10%; Highest Daily with Highest Daily Death Benefit (not available in NY) - 1.50%; Spousal Highest Daily with Highest Daily Death Benefit (not available in NY) - 1.60%; Highest Daily with Highest Annual Death Benefit (available only n NY) - 1.40%; Spousal Highest Daily with Highest Annual Death Benefit (available only in NY) - 1.50%. Additional fees, such as withdrawal fees, transfer fees and administrative fees, also apply. See the prospectus for more information.
- What are the limitations and restrictions I need to consider?
Highest Daily benefits have certain investment, holding period, liquidity, and withdrawal limitations and restrictions. Optional living and death benefits may not be available in every state and may not be elected in conjunction with certain optional benefits. See the prospectus for more information.
- What are some of the other considerations that I need to think about when investing in various asset allocation portfolios offered by a variable annuity?
When purchasing an 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 you could lose money. Additionally, fixed income investments are subject to risk, including credit and interest rate risk. Because of these risks, 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.
- How does Prudential manage the guarantees associated with Highest Daily?
It starts with our prudent product design where we manage risks in three important ways. First, we offer a broad selection of asset allocation portfolios that helps provide the potential for greater returns and helps us manage investment risk. Second, 10% of all purchase payments is automatically allocated to the Secure Value Account (SVA) - a fixed account that provides an annual guaranteed interest rate. You cannot make transfers into or out of the SVA. The SVA will earn interest daily at a crediting rate declared annually. And third, Highest Daily benefits use a predetermined mathematical formula, that is designed to help mitigate some of the financial risk associated with providing and managing your guarantees during all market cycles.
- What is the predetermined mathematical formula?
- Highest Daily suite of benefits uses a predetermined mathematical formula to mitigate some of the financial risks we incur in providing the guarantees under the optional benefits through all market cycles. Each business day, the formula determines if any portion of your account value in the permitted subaccounts (asset allocation portfolios), including any Dollar Cost Averaging (DCA) Market Value Adjustment ( MVA) options needs to be automatically transferred into or out of the AST Investment Grade Bond Portfolio (the "Bond Portfolio"). Amounts transferred by the formula depend on a number of factors unique to your individual annuity and include:
- The difference between the account value and the Protected Withdrawal Value;
- How long you have owned the benefit;
- The amount invested in, and the performance of, the permitted subaccounts, the Bond Portfolio and the Secure Value Account and
- The impact of additional purchase payments made to and withdrawals taken from the annuity.
The formula could mean that you miss opportunities for investment gains in the permitted subaccounts while amounts are allocated to the Bond Portfolio. The formula's allocation of amounts to the Bond Portfolio, however, could also protect your account value from losses that may occur in the permitted subaccounts. Please note: We are not providing investment advice through the formula. See the prospectus for complete details.
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 from your ﬁnancial professional. Please read the prospectus carefully before investing.
Issued on contracts P-BLX/IND(2/10), P-BLX/IND(2/10)NY, P-CR/IND(2/10),P-CR/IND(2/10)NY. Riders: P-RID-HD(2/14), P-RID-HD-HDB(2/14) et al. or state variation thereof.
For Compliance Use Only: 1004569-00002-00