Royal Neighbors of America Provides Only Fixed Annuity Options
4/18/2008
On Sunday, April 13, 2008, Dateline NBC aired an exposé on misleading sales tactics used to sell Seniors indexed annuity products. Royal Neighbors of America strongly opposes unethical sales practices. The sales practices highlighted in the segment are at odds with the high principles of our organization.
Frequently Asked Questions
What is an annuity?
An annuity is a type of life insurance contract that may be used to provide future income payments. When planned properly, annuities allow you to accumulate funds tax-deferred until you need them after retirement.
How is it used?
People use annuities for many reasons, including creating a financial cushion for living beyond life expectancy, or some use them as retirement income or as an emergency fund for medical or nursing home expenses.
If I have a Royal Neighbors of America annuity, how can I find out if it is indexed or not?
Easy, Royal Neighbors only offers fixed annuities.
What is the difference between a fixed annuity and an indexed annuity?
Fixed annuity
• Has a guaranteed minimum rate usually higher than an indexed annuity
• Pays a crediting rate that does not depend on stock market performance
• May offer a crediting rate that is guaranteed for a specific length of time
• Generally has lower surrender charges than an indexed annuity Indexed annuity
• Has a minimum guaranteed crediting rate generally lower than a fixed annuity
• A portion of the crediting rate is based on the stock market index to which it is tied
• Only a portion of the gains from the index are credited to the account, but the amount is never less than 0 even if the index loses value
• Usually has higher surrender charges than a fixed annuity
What financial risks are there with my Royal Neighbors annuity?
Royal Neighbors annuities do not have any stock market risk. Generally, the interest is tax-deferred. If you want to withdraw your money during the surrender term, you will be subject to surrender charges. (See specific product information at the end of this document.) Most Royal Neighbors annuities have an initial guaranteed interest rate for a specified period of time. Once your initial guaranteed rate ends, the rate may be reset by Royal Neighbors to any rate at or above the minimum rate.
What is a surrender charge?
If you want to take your money out sooner than the time period you originally contracted, you must pay a fee based on a percentage of the amount of the principal withdrawn which is called a surrender charge. These percentages and the length of the surrender charge period can vary. The longer you hold your contract, generally the less your surrender charge will be.
What is the surrender charge for the fixed annuity?
It varies by company. For example, for Royal Neighbors’ 5-year annuity the surrender charge begins at 8.5% for any withdrawals during the first year and then decreases each year until year 6 when there is no longer a surrender charge.
What should I know about my Royal Neighbors annuity that you have not told me?
All of the information surrounding your annuity was provided to you at the time your certificate was issued. Your agent can also answer your questions. In addition, as a member, you may call our Home Office at (866) 845-6665 for quick answers to your questions.
You say you are a non-profit membership organization. What does that mean to me?
In addition to being able to purchase insurance and annuity products, Royal Neighbors provides you various discount programs, including vision and dental care, a prescription drug card, health screenings, and hearing services. You are also eligible to apply for scholarships, disaster aid, and fraternal aid, and have the opportunity to participate in a variety of social and volunteer activities.
Can I get money from my current company and put it into a Royal Neighbors fixed
annuity?
Yes. You may transfer money from a different company, or you can purchase an annuity directly from Royal Neighbors. Call our Home Office sales department at (866) 845-6665, or call your local Royal Neighbors agent. Any transfer may be subject to surrender charges or taxation.
Please check with a tax advisor and agent before making any decisions.
Specific Product Information for Royal Neighbors of America Annuities
Royal Choice Annuity
• The initial interest rate is guaranteed for one (1) year. Thereafter, the interest rate credited may increase or decrease, but is guaranteed to never be less than 3%.
• For the first 6 years, any withdrawals of amounts above interest earned will be subject to
surrender charges.
Certificate Year 1 2 3 4 5 6 7+
Surrender Charge % 8.5 7.5 7 6 4 2 0
Thereafter, withdrawals can be made without surrender charges assessed by Royal Neighbors.
Neighbors Choice Annuity
• The initial interest rate is guaranteed for five (5) years. Thereafter, the interest rate credited may increase or decrease, but is guaranteed to never be less than 3%.
• For the first 5 years, any withdrawals of amounts above interest earned will be subject to surrender charges.
Certificate Year 1 2 3 4 5 6+
Surrender Charge % 8.5 7.5 7 6 4 0
Thereafter, withdrawals can be made without surrender charges assessed by Royal Neighbors.
Crown Choice Annuity
• The initial interest rate is guaranteed for six (6) years. Thereafter, the interest rate credited may increase or decrease, but is guaranteed to never be less than 3%.
• For the first 6 years, any withdrawals of amounts above interest earned will be subject to surrender charges.
Certificate Year 1 2 3 4 5 6 7+
Surrender Charge % 8.5 7.5 7 6 5 4.5 0
Thereafter, withdrawals can be made without surrender charges assessed by Royal Neighbors.
Call (866) 845-6665 for more information.
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