Vincent F. Gauci - VFG Associates,LLC

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    29432 Joy Road, Livonia, MI 48150

  • FAQ



    What is an Annuity?

    An annuity is an insurance product that pays out income, and can be used as part of a retirement strategy. Annuities are a popular choice for investors who want to receive a steady income stream in retirement.

    Here’s how an annuity works: you make an investment in the annuity, and it then makes payments to you on a future date or series of dates. The income you receive from an annuity can be doled out monthly, quarterly, annually or even in a lump sum payment.

    What are the advantages of an annuity?

    Their tax deferred status, the avoidance of probate, and the promise of guaranteed income for life make annuities different from other types of investments.

    How does an Annuity compare to a bank CD?

    Annuities and CDs (bank certificates of deposit) are similar in that they are safe, secure investments with guaranteed rate of returns based on interest rates, both issued by large financial institutions, CDs issued by banks, Annuities offered by insurance companies, but they both possess inherent differences as well.

    The big differences are that while Annuities offer everything CDs offer, they carry several advantages.  1. Generally Higher returns; 2. Tax-Deferral; 3. Liquidity CDs do have FDIC protection to guard against Bank or banking industry failure, but Annuities also have safety measures put in place by the state to ensure Insurance companies have reserve pools in place. Insurance companies may also be vetted for financial strength by obtaining their rating from objective rating firms — Standard & Poor’s, Moody’s, A.M. Best or Duff & Phelps . The more solid the rating usually equates to a more solid financial backbone of Insurance Company.

    How can I see what the real advantages are to tax deferral?


    Taxed Investment vs Tax-Deferred Annuity

    Taxed Investment vs Tax-Deferred Annuity

    The chart above shows a $26,000+ difference between a tax-deferred and non-tax-deferred instrument at equal rates of return after 20 years. Neither CDs nor mutual funds feature this benefit.

    How long do I have to keep my money in an Annuity?

    The investor, usually called an owner or annuitant, agrees to deposit funds with an insurance company for a specified period of time, say 7 years. The annuity is said to be in deferral during that period of time. While in deferral, most annuities will allow for partial distributions of interest gains or a yearly 10% free withdrawal or the required minimum distribution mandated by the I.R.S. (Many annuities allow for larger distributions if the owner is confined to a nursing home or is terminally ill.)

    Still another way to distribute annuity dollars is through a systematic withdrawal, referred to as an annuitization, based on a pre-determined schedule, say 5 years. However, if the consumer decides to take the entire contract out as a lump sum before the annuity has matured, then penalties are invoked based on the surrender schedule in the annuity contract.

    What happens when I die if I have an annuity?

    If the annuitant dies before the full contract value is paid out, the beneficiary usually receives any remaining money. To calculate the value of the annuity death benefit, interest is accrued until the date of the annuitant’s death. The death benefit for deferred annuities is usually equal to any money left in the contract, plus the interest accrued up until the annuitant’s death. For all types of annuities, contract add-ons, called riders, can be purchased to increase the death benefit

    How can I tell if an Annuity is a good choice for me?

    Your agent’s recommendation of an annuity should be based on his/her knowledge of your current financial situation, tax status, investment objectives and needs.  It’s important that you discuss with your agent your total financial and life situation, so you can decide whether an annuity is a good choice for you.

    Buyers Guide to Fixed Indexed Annuities © 2008 National Association of Insurance Commissioners

    To schedule an appoint for a full financial review and see if an Annuity is right for you click Here

    Securities Offered and Sold By and Through CoreCap Investments, Inc., A Registered Broker-Dealer and Member FINRA & SIPC, 4000 Town Center, 11th Floor, Southfield, MI 48075