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Securities and advisory services offered through Commonwealth Financial Network®, Member www.FINRA.org/www.SIPC.org, a Registered Investment Adviser. Fixed insurance products and services offered through Pipes Insurance Service, LTD, MaPP Investment Service, LLC or CES Insurance Agency.

This communication is strictly intended for individuals residing in the states of AL, CA, GA, FL, MI, NC, SC, IL, PA, TX, WV and OH. No offers may be made or accepted from any resident outside these states due to various state regulations and registration requirements regarding investment products and services.

Which type of annuity investment will offer the best return for me?

Annuities are a form of investment that are usually used in multiple different scenarios. These types of investments are typically sold by an insurance company and designed to provide an income to an investor that cannot be outlived. When investing in an annuity, be sure to consult with your advisor, as these are often complicated forms of investments with many different types available, and a lot of moving parts.

An annuity has two main phases: the accumulation phase and the annuitization phase. During the accumulation phase, a client’s money grows by either a fixed rate, or according to the underlying securities, for a period of time, tax free. When the client is prepared to take income from the annuity, they begin the annuitization phase. In the annuitization phase, the client is able to take an income from the annuity for a specified period of time, or for life.

There are three main forms of annuity contracts:

A fixed annuity is an investment vehicle that is purchased by contract, through an insurance company. This type of an annuity pays a fixed rate of interest for a specified period of time. With this form of annuity, the investor bears no risk as the insurer holds that burden. It’s important to understand that this form of annuity, along with most all the others, have a surrender period during which if an investor chooses to exit a contract there will be a surrender charge applied to their market value. When a fixed annuity is in the payout phase, the annuity will pay the investor by taking installments for the remainder of his/her lifetime. If a fixed annuity sounds like something of interest for you, please contact one of our advisors to learn more.

An immediate annuity is exactly what it sounds like. In this type of annuity contract, the insurance company receives an upfront, lump sum from the investor, and promises to pay an income to the investor for a specified period of time. There are multiple types of payout options with these types of contracts depending on what the investor’s desires are. A portion of each payment from this form of annuity will be taxable interest, and the other portion is determined to be a return of principal and is thus, tax free. As with all annuities, you and your advisor should consult prior to consideration.

A variable annuity is a type of annuity contract that allows an investor to take advantage of the stock market, while still having specified promises to them by the insurance company issuing the contract. With a variable annuity, the easiest way to understand how they function is by imagining that the contract is broken up into three buckets. The first bucket is your contract value, second is your income benefit and third is the death benefit of the contract.

The income benefit is going to almost always have a promised rate of interest minimum from the issuing company. If the market does better than the promised rate, then your income benefit will increase equal to the market. Meanwhile, if the market underperforms the promised rate, the insurance company will still credit the income benefit by the promised rate. The death benefit will most always be the greater of the contract value, or what you had originally invested into the contract.

When out of the surrender period in this type of contract the client has two main options on how they want to take money out. They can either choose to discontinue the contract and take the fair market value in lump sum out of the contract, resulting in a potential tax liability. The second option is to annuitize the contract and take a monthly income for the remainder of their lives based on the income benefit provided to them from the issuing company. It’s important to note that when withdrawals are made prior to age 59 1/2, they may be subject to a 10% federal tax penalty. The funds in these types of contract also grow tax deferred, similar to other forms of annuities. When considering a variable annuity, be sure to consult with a professional you trust prior to purchase as there are many different features that need described to you as the investor.

If you are ready to learn more about annuities or wish to add to your investment portfolio, contact MaPP at (330) 339-6413 or submit a form.


Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Guarantees are based on the claims-paying ability of the issuer. Withdrawals made prior to age 59½ are subject to a 10-percent IRS penalty tax, and surrender charges may apply. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. The investment returns and principal value of the available sub-account portfolios will fluctuate, so the value of an investor’s unit, when redeemed, may be worth more or less than the original value. Optional features available may involve additional fees.

When considering using variable life insurance policies for supplemental retirement income, it’s important to note that underperformance of the policy’s sub-accounts may require increased premium payments to prevent a policy lapse. In the event of a policy lapse or termination, outstanding loans will be deemed a taxable payment to you as the investor.

Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.


MaPP Investment Service LLC does not provide tax or legal advice. You should consult a legal or tax professional regarding your individual situation.

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