Illustration assumes a single lump-sum premium with no withdrawals unless specified. Interest compounds annually on a tax-deferred basis. This illustration is hypothetical and for educational purposes only; it does not constitute a guarantee of future performance. Rates are subject to change without notice and may vary by state. Multi-year guaranteed annuities are insurance products, not FDIC-insured bank deposits. Please consult your financial advisor before purchasing.
An annuity illustration projects how your contract may perform over time. Before the numbers make sense, you need to understand the four building blocks behind every figure on the page.
Premium
The premium is the money you place into your annuity contract. Think of it as your opening deposit — it's the foundation from which all future growth is calculated.
Annuities typically accept either a single lump-sum premium (one payment up front) or flexible premiums (multiple contributions over time, subject to contract limits).
Term
The term is the length of time your annuity contract is in effect — commonly 3, 5, 7, or 10 years for fixed annuities, though contracts vary widely.
During the term, your money grows (or is credited) under the contract's rules. Withdrawing funds before the term ends may trigger surrender charges, which decrease gradually and typically disappear by the end of the term.
Crediting Rate
The crediting rate is the interest rate applied to your annuity's value, determining how your money accumulates over time. For fixed annuities, this is a declared rate guaranteed for a set period. For fixed indexed annuities (FIAs), the crediting is linked to a market index — but you are protected from index losses.
Common crediting strategies in indexed products include caps (maximum gain credited), participation rates (percentage of index gain credited), and spreads (a fee subtracted from any index gain).
Premium Bonus
Some annuities credit a premium bonus — an immediate percentage added to your premium when the contract is issued. A 10% bonus on a $100,000 premium, for instance, would start your contract value at $110,000.
Bonuses sound attractive, but there are important trade-offs to understand: contracts with bonuses often carry longer surrender charge periods, lower crediting rates, or vesting schedules where the bonus becomes fully yours only after several years.
The values shown in an annuity illustration are projections based on assumptions, not promises of future performance. Hypothetical crediting rates used in non-guaranteed scenarios may never be achieved. Only the values in the "guaranteed" column reflect contractual minimums your insurer is obligated to honor. Annuities are insurance products — not FDIC-insured bank accounts. Please read your contract carefully and consider speaking with a licensed professional before making a purchase decision.