DELAWARE INSURANCE DEPARTMENT

WHAT ARE SOME OTHER EQUITY-INDEXED ANNUITY CONTRACT BENEFITS?

Annuity Income Payments

One of the most important benefits of deferred annuities is the right to use the value built up during the accumulation period to provide income payments during the payout period. While income payments are usually made monthly, you can often choose more or less frequent payments. The size of income payments is based on both the accumulated value in your annuity and the annuity's “benefit rate” that is in effect when income payments begin.

The insurance company uses the benefit rate to compute the amount of income payment it will pay you for each $1,000 accumulated value in your annuity. The benefit rate usually depends on your age and sex, and the form of annuity payment you have chosen. You can usually choose from many forms of annuity payments. You might choose payments that continue as long as you live, or as long as either you or your spouse live, or payments that continue for asset number of years.

Death Benefit

Annuities provide a variety of death benefits. The most common death benefit is either the guaranteed minimum value or the value determined by the index-linked formula.

Tax Deferral

Federal income tax on interest accumulated in an annuity is deferred until you take the interest out of the annuity. You may be required to pay taxes on the tax-deferred accumulation. You may have to pay a tax penalty if you withdraw the accumulation before you are age 59 =. The advantage of tax deferral is that you will probably be in a lower tax bracket in retirement than while you are employed. Also, during the accumulation period, you will be earning interest on money that you would otherwise have used to pay taxes. Tax-qualified annuities are subject to different rules. In any case, you should consult your tax advisor.

1998 National Association of Insurance Commissioners