Věstník (Temple, Tex.), Vol. 102, No. 12, Ed. 1 Wednesday, March 19, 2014 Page: 19 of 32
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2014 SPJST Life Insurance and Annuity Extra
19
How much should
I invest in an annuity?
SPJST Annuities
Straight Annuity • 5-YearAnnuity • 10-YearAnnuity
Single Prémium Annuity • Traditional IRA • Roth IRA
Unlike a 401 (k) or an IRA, there are
no limits on the amount that you can
invest in an annuity.
Whether you’re considering a deferred
or immediate annuity, the amount of
money you should consider putting
into an annuity depends on:
• Your immediate actual and poten-
tial financial needs
• Your long-term financial goals
•Your current savings/investment
portfolio
• The range of altematives available
to you
Of these, the most important is your
immediate actual and potential finan-
Most statě insurance departments
require insurance companies to pro vide
a “free-look” period after you háve
purchased the policy. It is typically a
10-day spán in which you can pull out
of the contract and obtain a refund
based on contract terms or statě law.
You should use this time to review the
policy, ask your insurance agent or
If you také money out of an annuity,
there may be a penalty called a surren-
der fee or a withdrawal charge. This
fee is higher if you withdraw funds
within the first years of an annuity con-
tract. The penalty, however, drops
gradually each year. Since immediate
annuities are purchased to provide in-
come, they usually can’t be “surren-
dered” and will therefore not be
subjected to a fee.
A typical surrender fee schedule
could be:
• 7 percent if you withdraw funds
in the first year,
• 6 percent in the second year,
• 5 percent in the third year,
• 4 percent in the fourth year,
• 3 percent in the fifth year,
• 2 percent in the sixth year,
• 1 percent in the seventh year, and
• 0 in the eighth year and beyond.
cial needs. If you’re buying a deferred
annuity and you háve a sudden need for
cash, you can usually withdraw a smáli
amount without penalty. However,
you’11 likely pay a penalty if you make
a large withdrawal within a few years
after you’ve bought the annuity. If
you’re buying an immediate annuity,
you usually can’t get any more than the
regular payments, no matter how badly
you need cash. However, if you háve
other sources of cash that are sufficient
for any emergency or unforeseen
needs, then the immediate needs crite-
rion is satisfied and the other criteria
become more important.
(Source: Insurance Information Institute,
http://www.iii.org/articles/how-much-should-i-
invest-in-an-annuity.html)
—SPJST—
stockbroker any additional questions
and make a finál decision as to whether
the annuity you selected was right for
you.
(Source: Insurance Information Institute,
http://www.iii.org/articles/what-is-a-free-look-
provision.html)
The purpose of the fee is to allow
the insurer enough time to recover its
expenses, largely commissions, in set-
ting up the annuity contract. It also
serves to discourage annuity buyers
from using deferred annuities as short-
term investments for quick cash.
Some contracts may permit you to
pull out a portion of the funds annually,
usually up to 10 percent without a sur-
render charge. If this option is impor-
tant to you, ask your insurance agent or
company representative about this be-
fore deciding to invest your money in a
specific annuity. Also, ask if there may
be any other fees or charges.
(Source: Insurance Information Institute,
http://www.iii.org/articles/what-are-surrender-
feesMtml)
—SPJST—
What is an SPJST Annuity?
An annuity is a contract between the
member and SPJST. The object of an
annuity is cash accumulation. Annu-
ities are not life insurance. An annuity
has a beneficiary provision, but the
only benefit paid at death is the total of
the funds accumulated at that point, un-
less other provisions háve been made.
The member contributes funds to the
SPJST annuity in lump sums or premi-
ums over time. These funds accumu-
late tax-deferred compound interest
until a specified maturity dáte. At ma-
turity, the member can receive the
funds either in a lump sum, payments
over a certain time period, or even
equal payments guaranteed for the rest
of the member’s life.
Two Types of Annuities
are available:
Deferred or Immediate.
Deferred annuities enable the mem-
ber to contribute funds through tax-de-
ferred accumulation over a period of
time. This is called the accumulation
period. The accumulation period con-
tinues until the maturity dáte, at which
time the pay out period begins. The ma-
turity dáte is usually set at age 65 or
later, but can be changed at any time.
After the maturity dáte, the pay out
period is when SPJST distributes the
accumulated funds to the member ac-
cording to the member’s wishes,
whether it is a lump sum, distributions
for a set period of time, or lifetime op-
tions that the member cannot outlive.
SPJST has three deferred annuities:
Flexible Prémium Annuity
5-Year Annuity
10-Year Annuity
The Flexible Prémium Annuity ac-
cumulates interest that is reviewed
quarterly, but can never go below a
guaranteed minimum rate. The 5-Year
Annuity and 10-Year Annuity háve
guaranteed locked-in rates for a full
five years or 10 years.
Immediate annuities work just like
deferred annuities except there is no ac-
cumulation period. The member con-
tributes a lump sum of funds ($10,000
minimum), and the pay out period be-
gins immediately.
SPJST Annuities offer benefits not
found in other tax-qualified plans
{such as 401(k) plans}. First, there is
no IRS contribution limitation. SPJST
members can contribute any amount
(within reason) to an annuity. Second,
SPJST annuities do not require vesting.
SPJST guarantees that the total amount
of funds (principál plus interest) will be
paid directly to the beneficiary upon
the death of the member in the accu-
mulation period.
SPJST Flexible Annuities are ušed
to fund Individual Retirement Arrange-
ments (IRA), both Traditional and
Roth. More IRA information follows in
this section.
All Flexible Annuities
Straight Annuity
Traditional IRA
Roth IRA
Eligibility Requirements
SPJST members (life insurance cer-
tificate holders) are eligible and may
purchase an annuity with a $100 mini-
mum contribution.
Exceptions
Any individual under 70 years of
age must apply for an SPJST life in-
surance certificate, but if uninsurable
or rated above standard, the individual
may become a member with the pur-
chase of an annuity in an amount of
$1,000 minimum.
Any individual under 70 years of
age regardless of insurability may be-
come a member with the purchase of
an annuity in an amount of $5,000 min-
imum.
Any individual over 70 years of age
regardless of insurability may become
a member with the purchase of an an-
nuity in an amount of $1,000 mini-
mum.
Issue Ages
Flexible Prémium Annuity
0 to 85 years
Single Prémium Immediate
0 to 90 years
Issue age may be extended with
prior approval and arrangement with
Supreme Lodge Vice President. If
issue age is more than 70, agent com-
missions will be affected.
What is a “free-look” provision?
—SPJST—
What are surrender fees?
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Zavodny, Melanie. Věstník (Temple, Tex.), Vol. 102, No. 12, Ed. 1 Wednesday, March 19, 2014, newspaper, March 19, 2014; Temple, Texas. (https://texashistory.unt.edu/ark:/67531/metapth631942/m1/19/: accessed July 18, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Slovanska Podporujici Jednota Statu Texas.