Definitions

A Annuitization

If you annuitize your variable annuity contract, the total value is converted into guaranteed retirement payments. You can choose to receive payments for a certain number of years, for your lifetime, or for the lifetime of you and other person. With annuitization, the taxes on investment gains are spread over the number of payments that you will receive. Your payments will be made up of both principal (your original contribution) and earnings from your investments. Once your principal has been returned, your payments are made up entirely of earnings.

All guarantees (principal lifetime income and interest rates) are subject to the claims-paying ability of the issuing insurance company.

Withdrawals of taxable amounts from annuities are subject to ordinary income tax and, if taken prior to age 59 ½, a 10% IRS tax penalty may apply. Withdrawal charges may also apply.

A Annuity

An annuity is a long term contract designed for retirement purposes. It may be purchased with either a single payment or a series of payments, depending on the style of annuity chosen. There are two types of annuities: deferred and immediate.

D Deferred Variable Annuity

With a deferred annuity, the payments made to the insurance company are held by the company until you take withdrawals. The payments are placed in the annuity's investment options depending on your allocation preference. The value is not guaranteed, and will vary and may be worth more or less than at time of purchase. Payments grow tax-deferred until they're withdrawn in a lump sum or converted to an income stream.

G Guaranteed Income

Income that you will receive over time, regardless of market fluctuations.

All guarantees (principal lifetime income and interest rates) are subject to the claims-paying ability of the issuing insurance company.

I Immediate Variable Annuity

The same as a deferred variable annuity, except that is funded with a single, lump-sum payment and converted into an income stream typically within the first year of purchase.

M Minimum Guaranteed Death Benefit

The insurance company, prior to annuitization, pays a contractual amount to the beneficiary named on the contract upon the death of the contract owner and/or the death of the person on whom the contract is based. The guarantee is backed by the claims paying ability of the issuer.

P Payout

The amount of money you receive from your annuity investment.

R Retirement Age

According to the Social Security Administration, full retirement age varies depending upon when you were born. For example, if you were born between 1943 and 1954, your full retirement age is 66. You can start receiving Social Security retirement benefits at age 62. However, you'll be paid only 75% of your monthly benefit because you'll be getting it for an additional 48 months. A well-funded annuity can make you less dependent on Social Security as well as make it possible to retire earlier.

V Variable Annuity

An investment - offering the potential for higher growth but involves taking additional risk - aimed to provide superior retirement income.

Variable Annuities

What is a variable annuity?

A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you, either immediately or at some future date. A variable annuity combines features of an investment product, which can provide growth potential, and inflation protection, and an insurance contract, which can give you access to certain income, death benefit and wealth protection guarantees.

Why would I want one?

There are three distinct benefits an annuity offers that other financial vehicles may not: 1) Guaranteed Death Benefit, 2) Tax Deferral, 3) Guaranteed Payments.

Another reason why people buy Annuities is that people today are living longer. And it's not unusual for retirement to last 30 or more years. A deferred variable annuity provides the option to receive guaranteed payments for life, even if you live beyond 100!

With a deferred variable annuity you don't pay taxes until withdrawals begin - at which time your investment gains are taxed like ordinary income * . A deferred variable annuity can help fill the gap between what you'll need to live comfortably during retirement and what Social Security and pensions - which are becoming an increasingly inadequate source of retirement income - are likely to pay you.

Through the potential for asset appreciation, a deferred variable annuity can help offset the negative affects of inflation. Given that inflation has eroded purchasing power by 3% per year since 1926 **, you can expect $100,000 today to be worth only $74,000 ten years from now. Although annuities can provide growth potential if the investments experience good performance, there is a risk that your account value will decrease if your investments perform poorly.

However, optional guarantied withdrawal benefits, available for an additional fee, can be purchased to help guarantee a return of principal through annual 5% withdrawals for 20 years.

With a deferred variable annuity, you get a guaranteed death benefit, which typically provides your beneficiaries an amount that is - at the very least - equal to the amount you originally contributed, regardless of the market value at the time of your death and prior to annuitization.

* Withdrawals may be subject to withdrawal charges and will reduce the death benefit and optional benefits. In addition, withdrawals made prior to age 59½ may be subject to a 10% IRS penalty tax.

** Source: Bureau of Labor Statistics, 2004. As measured by the average annual change in the Consumer Price Index (CPI) for the period January 1,1926 to December 31,2003.

Sales of variable products must be preceded or accompanied by the current prospectuses for the products and their investment choices, which contain more information on charges, expenses, risks, and investment objectives. Please read them carefully before you invest or send money. Contact your Registered Representative if you have any questions.

Products and features not available in all states.