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Variable annuities can offer the following features and benefits:
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Variable Investment Portfolios: Variable annuities offer a choice of professionally-managed investment portfolios - similar to mutual funds - that often share similar investment objectives and underlying investments as the public fund although the performance may be different. Typically, the underlying investments in variable annuity portfolios consist of stocks, bonds, fixed income, securities or a combination of the three. Returns vary with the performance of the investments selected. As with any variable annuity, amounts allocated to the variable portfolio are subject to market risk, including the possible loss of principal, and payments are based on the performance of the investment portfolio. |
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Guaranteed Death Benefit: Variable annuity returns are not guaranteed. However, the issuing insurance company provides a guaranteed death benefit in the event of a contract owner's, joint owner's or annuitant's death. This death benefit is payable to either the new contract owner, a surviving contract owner or the named beneficiary(ies). Typically, the guaranteed death benefit provides the payee with at least the initial amount invested (less any withdrawals). Depending on the program chosen, Morgan Stanley variable annuities offer additional guarantees, such as an annual "step-up" in value which, upon death, provides the beneficiary(ies) with at least the account value on the most recent contract anniversary. Payment of death benefits is based upon the claims-paying ability of the insurance company. |
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Avoidance of Probate: Upon the investor's death, annuity proceeds are paid directly to the named beneficiary, avoiding delays, costs and publicity of probate. |
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Tax Deferral: Earnings are free from current income tax until withdrawn, but they may be subject to a 10% tax penalty if withdrawn before the investor reaches age 59½. |
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Fixed Account: This option provides investors with a guaranteed fixed rate of return for their variable annuity money. Investors typically use a fixed account as a temporary investment while they wait out periods of high market volatility. |
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Automatic Additions Program: Used by investors wishing to make periodic contributions to their investment automatically from other accounts such as their personal checking or savings account, this program may be elected or canceled at any time. |
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Automatic Dollar-Cost-Averaging: This program automatically moves money into one or more specified variable annuity portfolios at regular intervals. It is a proven method of easing into the market slowly and helping to level out market fluctuations. It does not guarantee a profit, or protect against loss in a prolonged declining market environment. |
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Liquidity: Investors may withdraw a portion (typically 10% or 15%) of the initial purchase amount annually without surrender charges. Applicable taxes are due on earnings upon withdrawal, and a 10% penalty may be incurred if withdrawals are made before the investor reaches age 59½. However, the 10% penalty may not apply when you take periodic payments or when a withdrawal is made as a result of death or disability. |
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Systematic Withdrawal Program: This program provides investors with periodic income payments that are taxed as ordinary income. Withdrawal of earnings may be subject to applicable taxes and a 10% tax penalty if withdrawn before the investor reaches age 59½. Depending on the annuity and the amount of the withdrawal, surrender charges may also be applicable. |
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Income for Life: By annuitizing, the contract is converted to create a periodic income stream that be can guaranteed for the investor's life, the life of an investor and spouse or for a "period certain" such as five or 10 years. |
NOTE: Variable annuities are offered by prospectus only. The prospectus contains complete details on features, benefits, risks, fees and expenses. Clients and prospective clients should read the prospectus carefully prior to investing.
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