An annuity is a contract in which an individual agrees to pay premiums to an insurance company and receives, in exchange, a regular stream of income payments from the issuer either now or at some time in the future. Unlike many financial products available, an annuity can provide an income you can't outlive.

A Guaranteed Death Benefit: Generally, annuities also offer a death benefit. While the types of death benefits differ between products, annuities allow you to pass the proceeds of the contract directly to a named beneficiary, avoiding the delay and expense of probate.

Tax-Deferred Growth: An annuity is a long-term financial product where interest accumulates tax-deferred. Because you do not pay taxes on annuity assets until you access the proceeds in your contract, your money grows tax-deferred. As a result, you may be able to accumulate more money than a traditional taxable investment earning the same rate of return.

The duration of an annuity can be broken down into two phases: The accumulation phase and the annuitization phase.

Accumulation Phase: During this phase, earnings on the contract accumulate tax-deferred. Depending upon the type of annuity purchased, it may be possible to add additional premiums during this phase.

Annuitization: In this phase, the annuitant chooses a payout option and begins receiving income. Typical annuity payment options include payouts for one's lifetime, or for a specified number of years. Once the payout option has been chosen, it cannot be changed, nor can premium be added after the payout period begins.

Depending upon financial goals, need for income, and other considerations, individuals may choose an immediate annuity or a deferred annuity.

Deferred Annuity: Unlike an immediate annuity, a deferred annuity allows you to postpone (defer) the start of your income payments until a time in the future that you choose. A deferred annuity is primarily designed to accumulate assets for long-term financial goals.

Equity Indexed Annuity: Equity indexed annuities provide the potential to outperform traditional fixed rate annuities and avoid the downside risk of investing in the stock market. That is because interest credited to equity indexed annuities is linked to increases in commonly used indices such as the S&P 500®, and this interest is guaranteed to never fall below zero. The result is the potential for higher stock market-linked returns without any downside risk.

"S&P 500®" is a trademark of The McGraw-Hill Companies, Inc. and is licensed for use by Americo Financial Life and Annuity Insurance Company. The Equity Indexed products offered by Americo Financial Life and Annuity Insurance Company are not sponsored, endorsed, sold or promoted by Standard & Poor's, and Standard & Poor's makes no representations regarding the advisability of purchasing this product. The S&P 500 Index is a market-valued weighted price index which reflects capital growth only and does not include dividends paid on stocks.

Fixed Annuity: You are credited a fixed interest rate that typically does not fluctuate over the duration of your contract.

Immediate Annuity: This type of annuity is designed to make payments to you shortly after your lump-sum premium payment is made. The income stream is paid periodically from the premium payment and accumulated interest earned on that premium.

Taxable distributions (and certain deemed distributions) are subject to ordinary income tax and if taken prior to age 59 1/2, may also be subject to a 10% federal income tax penalty. Additionally, some distributions may be subject to surrender charges if made during the surrender charge period.

Neither Equidigm or Americo Financial Life and Annuity Insurance Company nor its agents provide financial, tax, legal, or accounting advice. Please consult with a qualified tax advisor with regard to your individual circumstances.

If you're considering purchasing an annuity, it is important to consult with your financial professional for insight into the options and objectives which are best suited for you. Be sure to carefully review any disclosure information when making any financial decisions.