Q:

What is Midland National life annuity?

A:

Quick Answer

A Midland National Life annuity is a type of investment plan offered by Midland National Life Insurance Company. An annuity is a contract in which the investor gives the insurance company monies in return for regular disbursements of those funds, starting either immediately or at an agreed-upon future date.

Continue Reading

Full Answer

One advantage to an annuity account is, like 401(K) plans, holders do not have to pay taxes on the interest accrued in the account until the funds are withdrawn. Interest on annuity accounts compounds, meaning the interest gained on the account also collects interest. Additionally, unlike 401(K) plans, annuities have no annual contribution limit.

As annuities are sold by insurance brokers or salespeople, investors may pay a commission of up to 10 percent. Generally, investors who remove funds from an annuity early must pay a surrender charge. In most cases, this fee starts at approximately 7 percent on funds withdrawn in the first year and decreases by 1 percent each year thereafter. Annual fees for insurance, riders and investment management services may cost 2 to 3 percent of the total funds per year. Annuity holders who withdraw funds before they are 59.5 years old must also pay a 10 percent early withdraw penalty.

Learn more about Financial Planning

Related Questions

Explore