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Farmers Equity Indexed Annuity is a single premium deferred annuity that links interest earnings to the Standard & Poor's 500 Composite Stock Price Index (S&P 500), without dividends. Unlike mutual funds or variable annuities, Farmers Equity Indexed Annuity protects you from the downside risk of the S&P 500 index by guaranteeing the return of your original principal, with interest, at the end of the term, assuming no withdrawals.
When you purchase a Farmers Equity Indexed Annuity with a minimum $5,000 premium, you receive interest earnings based on a percentage of the increase in the S&P 500 index over a seven-year term. The beginning index value is set at the start of the term. The ending index value is based on the average of index values at the end of four quarterly intervals preceding the end of the term.
The percentage change in the index value between the beginning index value and the ending index value is then multiplied by a participation rate to determine the end of term value to be credited to your annuity. You must hold the annuity a full seven years to realize this increase in your policy value.
Your participation rate is set at the time of issue. It is guaranteed not to change during the index term. The participation rate is the percentage of the S&P 500 increase, if any, that is credited to you policy.
No matter what happens to the S&P 500 index, your annuity has guaranteed minimum value. The value at any time is 90 percent of your initial premium (less withdrawals) accumulated at 3 percent annual interest. You are guaranteed 110 percent of your initial principal, when you hold the annuity for the full term, assuming no withdrawals.
Farmers Equity Indexed Annuity also offers tax deferral benefits. Annuities are a good tax-deferred choice for surplus capital, once 401(k) and IRA plans are maximized. Except for plan limits, there is no cap on the amount that can be put into an annuity, so it is an excellent way to generate additional tax-deferred income.
You may make partial withdrawals after the first policy year. withdrawals must exceed $500 and are limited to one per year. The annuity balance may not fall below $5,000. You may also surrender the policy for its guaranteed minimum policy value. However, an IRS penalty of 10 percent may apply to funds withdrawn prior to age 59½.
In the event of the annuitant's death, the beneficiary receives either the initial premium (less withdrawals) or the guaranteed minimum policy value, whichever is greater. In the event of the owner's death, if other than the annuitant, the beneficiary receives the guaranteed minimum policy value.
Properly structured, your beneficiary death benefit proceeds without penalty or fee and avoids the expense, delay and frustration or probate.
You may elect an income settlement option based on the value of your policy at any time. Choose from a number of options, including a guaranteed life income.
Issue Ages: Annuitant or owner may not exceed age 75 at issue.
Minimum Premium: $5,000
Maximum Premium: $1,000,000
When planning for a secure financial future, many people diversify by owning a variety of financial vehicles such as growth stocks, bonds, annuities and Life insurance. They do this with a goal of risk-free stability of principal, and the rewards offered by capital growth.
Farmers Equity Indexed Annuity offers both the potential for a higher level of interest earnings and the guarantee to receive 110 percent of the original premium when held to term without withdrawal. This is, indeed, the best of both worlds!
Farmers Equity Indexed Annuity should be part of a well considered and diversified retirement accumulation plan.
Farmers Equity Indexed Annuity is single premium deferred annuity designed specifically for those seeking:
Hypothetical Seven-Year Accumulation |
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| What could have happened ... assuming a hypothetical 80 percent participation rate and actual historical performance for the S&P 500 Index during the seven-year periods shown. |
Premium | Hypothetical End of Term Value |
| Guaranteed return when held with no
withdrawals Any seven-year period with little or no S&P 500 Index growth |
$100,000 | $110,688 |
| Seven years of low S&P Index growth June 30, 1975 - June 30, 1982 |
$100,000 | $116,701 |
| Seven good years June 30, 1982 - June 30, 1989 |
$100,000 | $232,112 |
| The last seven years December 31, 1989 - December 31, 1996 |
$100,000 | $175,302 |
| The historical performance of the S&P 500 Index is not a guarantee of future results. This chart does not represent that the hypothetical end-of-term value shown will be achieved in the future. | ||
Your principal and interest are guaranteed by contract and backed by the full resources of Farmers New World Life.
Farmers Equity Indexed Annuity is designed as a long-term accumulation product. If you anticipate withdrawing any of your money during the seven-year term, you should consider a different product with more liquidity for some, or all of your funds.
It is as simple as A x B x C, where:
A = The Premium less withdrawals
B = The Percentage Change in index value which is:
| Average Index Value at the End of Last Four Quarters of : | |
| Index Term | - Issue Date Index Value |
Issue Date Index Value |
|
C = The Participation Rate
Even if the S&P 500 Index declines, Farmers protects your principal if held for the full seven-year index term. Farmers offers the following minimum guarantee:
(Premium x .90) + 3 percent interest per annum (compounded)
After the end of the seven-year term, the policy continues in force until surrendered. Any funds that are not withdrawn by the owner or used by the owner to obtain regular income payments will be credited with daily interest at the rate of 3 percent per year, compounded annually. The Company may declare interest rates which are higher than this guaranteed rate.
The S&P 500 Index is a leading benchmark for U.S. equity market performance. This index measures the combined performance of stocks from many of the largest corporations in America. Increases in the index are a key interest credited to the Farmers Indexed Annuity.
The S&P 500 represents the combined performance of 500 leading companies, excluding dividends. This information is historical and does not represent future performance of the index. Here it is compared to inflation. In the last 10 years, inflation has reduced the purchasing power of the dollar about 30 percent, and over the lat 20 years it has reduced it over 60 percent.
Source: Bloomberg Financial Markets.
Farmers Equity Indexed Annuity is a single premium deferred annuity. Purchase of this product does not represent participation in the stock market, S&P 500 or the stocks that make up the S&P 500.
"Standard & Poor's®", "S&P 500®" and "Standard & Poor's 500" are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by Farmers Group, Inc. The product is not sponsored, endorsed, sol or promoted by Standard & Poor's, and Standard & Poor's makes no representation regarding the advisability of purchasing the Product.