Review your Annuity for 15 Days
The owner of a Navy Mutual Single Premium Deferred Annuity (SPDA) may terminate his or her contract within 15 days after purchase and receive a full refund of the premium that was placed into the annuity.
Single-premium payments may range from a minimum of $10,000 per contract up to a maximum of $1,000,000 per owner. No additional premiums may be paid into an existing annuity. Any new premiums will be applied to a new annuity contract, subject to the minimum $10,000 requirement. Interest rates will be calculated by the lock-in period and the single-premium payment amount. Larger premium payments will allow higher interest rates to be credited to the contract. The premium payment thresholds to obtain a higher interest rate are at $25,000, $50,000, and $100,000. Please contact Navy Mutual, at 1-800-628-6011, for current rates.
Annuity Interest Rate Lock-In Periods
Navy Mutual periodically establishes current interest rates for all new Navy Mutual Single-Premium Deferred Annuity contracts, based on your chosen lock-in period. A lock-in period from among 2, 5, 7, or 10 years ensures that your interest rate does not change during that period.
Options after the Interest Rate Lock-In Period
Once the plan reaches the end of the lock-in period, the annuity owner has the following options from which to choose:
- Continue the annuity with a new lock-in period of 2, 5, 7, or 10 years, at current interest rates.
- Continue the annuity with market interest rates, which can fluctuate throughout the year.
- Receive a guaranteed stream of income during a specific number of years, or for your lifetime.
- Receive the accumulation value as a lump-sum payment.
Premium Bonus When You Lock the Investment Period
When an annuity is purchased with a lock-in period of either 7 or 10 years, Navy Mutual will credit to the single-premium deposit a bonus equal to one percent of the amount of the single premium. The bonus immediately enhances the single premium and, consequently, the amount starts accumulating at the applicable interest rate.
For example, a $100,000 premium will receive an immediate $1,000 bonus that results in a $101,000 initial accumulation value, which will begin accumulating interest from the beginning of the contract. Lock-in periods of less than 7 years will not receive a premium bonus. If an annuity is surrendered voluntarily, prior to the end of the lock-in period, the bonus and any interest earned on the bonus will be deducted from the surrender value. (See the discussion about surrenders further in this section.)
Tax-Deferred Accumulation for a Higher Growth Rate
Compliant with the current U.S. Tax Code, Member earnings generated within Navy Mutual's SPDA do not create an income-tax liability until payments are distributed from the annuity. Without taxes being paid on the annual interest gains, the annuity will enjoy a greater effective growth rate than comparable taxable investments.
Navy Mutual guarantees you will receive the initial interest rate from the annuity effective date through your elected lock-in period, unless you make withdrawals or implement an early surrender.
Withdrawals from Your Annuity
After the Navy Mutual Single-Premium Deferred Annuity has been in effect for one year, the owner may make annual withdrawals of up to 10% of the accumulated value. The 10% withdrawal amount is not cumulative. Up to four withdrawals may be made each year without charge. Withdrawals in excess of four will incur a withdrawal fee. According to the current U.S. Tax Code, all withdrawals are considered a withdrawal of interest first, and principal second. Therefore, an income tax liability will be incurred on any interest distributed. Any untaxed interest received by the annuitant in the future will be received as ordinary income. Fund withdrawals received prior to age 59½ may be subject to a 10% federal tax penalty. Please consult your tax professional for details.
A Navy Mutual SPDA may be surrendered at any time, with no surrender fees, loads, or commissions deducted. If the surrender of the SPDA occurs prior to the completion of the contract lock-in period, the fair market value of the annuity, less any premium bonus and accumulated interest on the bonus, will be provided to the plan owner. The fair market value of the annuity is determined by market interest rates at the time of surrender and may result in either a higher or lower accumulation value than what was projected. No market value adjustment (MVA) will occur if the contract is surrendered due to the owner's need for nursing home care, terminal illness, death, or when the owner elects to receive an immediate annuity paid out during a period of time that meets or exceeds the owner's life expectancy.
MVA Example: You purchase an annuity with an initial interest rate of 7%, and during the next three years interest rates drop to 4%. If you surrender your annuity before the end of your "lock-in" period, your MVA would be positive. Money would be added to your surrender value because interest rates are lower than when you made your contribution. If interest rates were to rise, your MVA would be negative and money would be deducted from your surrender value.
Only an eligible individual, as described in the Navy Mutual Eligibility policy may be established as the owner. Joint ownership is not allowed. Please be aware that minor children who are established as contract owners do not have legal capacity to make any changes to a contract until they become of legal age, as determined by your state.
A named successor owner or beneficiary will receive the accumulation value of the annuity at the time of death without the delay and cost of probate. Any accumulated interest will be taxable to the new owner as the income is distributed from the annuity.
If you have any questions about annuities, contact Navy Mutual today.