What is an annuity?

Basics of annuities

An annuity is a retirement product that may provide protected, reliable income when you need it. An annuity can help bridge the gap between the savings you’ve accumulated over time and traditional sources of retirement income, like Social Security. Plus, if you don’t need the income immediately, you can let it potentially grow tax deferred.^* That’s why an annuity can be a powerful addition to your financial plan.

Annuities can be versatile with a variety of options tailored to your retirement plan. When considering an annuity, the process can look like this:

Decide when you need retirement income: You can invest a lump sum and choose to start receiving payouts immediately, or down the road.
Choose a product that’s right for you: We offer a variety of annuities that may fit your specific retirement needs.
Customize your plan with unique options: Discover how add-on benefits^† can guarantee income for life^‡ or help you leave a legacy.

How do annuities work?

Annuities can provide several retirement benefits. Our annuities offer flexible choices so you can choose the options that help meet your wants and needs.

The way an annuity works is that you pay your premiums to an insurance company - either as a single, lump sum payment, or in smaller payments over the course of time. The amount you pay into an annuity contract can potentially grow tax-deferred.

You can choose when you want to start receiving annuity payments from your contract in return. The size of your payment is based on the accumulated value in your annuity, your type of annuity, and the terms you chose at the beginning of your contract. You can receive these payments for the rest of your life, or whatever other options you may have chosen at the beginning of your contract.

An annuity is a long-term retirement product, there can be withdrawal charges if you leave the contract early, and a 10% tax penalty if you withdraw before age 59 ½ .

Here at Jackson, we also offer modern annuities where you can retain ownership over your funds and still receive potential lifetime income or legacy benefits for an additional cost. This way, you can have more flexibility in case your life circumstances change.

Keep reading to learn more about specific types of annuities.

Our annuity products

Your retirement plan is as unique as you are. For that reason, we offer different types of annuities to fit your specific wants and needs in retirement.

Annuities are long-term, tax-deferred vehicles designed for retirement and are insurance contracts.Variable annuities and registered index-linked annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met.

Benefits of annuities

With fewer employer-sponsored retirement plans available, you are probably looking for strategies to help grow and protect your hard-earned assets to fund the retirement you want. Annuities may provide an opportunity for growth and protection for income that can last your lifetime.

Income Protection

Growth Potential

Tax Deferral

Legacy Benefits

^*Tax deferral offers no additional value if an IRA or a qualified plan, such as a 401(k), is used to fund an annuity and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a legal entity such as a corporation or certain types of trusts.

^†Add-on benefits that provide income for the length of a designated life and/or lives may be available for an additional charge. The amount of income that these benefits may provide can vary depending on the age when income is taken, and how many lives are covered when the benefit is elected. The cost of these benefits may negatively impact the contract's cash value. There is no guarantee that a variable annuity with an add-on living benefit will provide sufficient supplemental retirement income.

^‡Lifetime income of the add-on lifetime benefits available with variable annuities becomes effective at issue if the designated life is age 59½ at issue, or upon the contract anniversary following designated life's 59½ birthday, provided the contract value is greater than zero and has not been annuitized.

Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. Clients should rely on their own independent advisors as to any tax, accounting, or legal statements made herein.

Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York. For variable annuities, guarantees do not apply to the principal amount or investment performance of a variable annuity’s separate account or its underlying investments. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

The latest maturity date or income date allowed under an annuity contract is age 95, which is the required age to annuitize or take a lump sum. Please see the prospectus for important information regarding the annuitization of a variable annuity contract.

Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York, by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York). Annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These contracts have limitations and restrictions. Jackson issues other annuities with similar features, benefits, limitations, and charges. Contact Jackson for more information.

Jackson^® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company^®, and Jackson National Life Insurance Company of New York^®.

What is an annuity?

Basics of annuities

How do annuities work?

Our annuity products

Benefits of annuities

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