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Share Certificates vs. Fixed Annuities

 
  CERTIFICATE FIXED ANNUITY
What Is It? Designed to save for short to long-term goals without the need for immediate access to your cash. Fixed annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal.
Insured? YES
Federally insured to at least $250,000 by the NCUA		 YES
Guaranteed by the issuing insurance company. Payments are based on the claims paying ability of the issuer.
Competitive interest rate? YES YES
Often there is an initial bonus rate for all new purchases and lifetime minimum future rate
Tax-deferred? NO
Dividends are reported and taxed each year		 YES1
Interest is not taxed until withdrawn
Flexible income? NO
Dividends only		 YES1
Interest, fixed dollar amount, period certain, and lifetime income options
Penalties for early withdrawal? YES2
Penalty applies if withdrawn before maturity. No penalty if withdrawn within 7 days of maturity for auto renewing certificate.		 YES2
Declining withdrawal charge per contribution; unrestricted access thereafter
"Withdrawal penalty waivers? YES
No penalty when withdrawn because of death or incompetence of owner; waived for IRA required minimum distribution		 YES
Various conditional waivers: nursing home, terminal illness, hospital confinement, unemployment
Flexible addition options? MAYBE
Depending on the certificate; see terms		 MAYBE
Depending on the annuity
Probate avoidance? MAYBE
When naming a beneficiary or held under trust.		 YES
Time and expense of probate is avoided because account values pass directly to the named beneficiary
Service fees or charges? NO2 NO2
 

Terms & Conditions

1Withdrawals of earnings before age 59 ½ are subject to a 10% federal tax penalty (tax and surrender charges apply).
 

2If terminated before end of term, certificates are subject dividend penalty based on the term; annuities subject to tax and surrender charges. Guarantees are based on the claims paying ability of the issuing insurance company. North Island Credit Union CA Insurance License #0719223
 

The features and benefits listed above are just some of the key factors to consider when purchasing an annuity or certificate. Please consult with your financial advisor for more information on which product may be best for you. Securities and Insurance Products offered through LPL Financial and its affiliates. Member FINRA/SIPC.