What Are Fixed Index Annuities?

There is a new class of hybrid annuity that provides a portion of the stock index performance with a no-loss provision. It is known as the equity index annuity. This new type of annuity is not a security. as you might suspect, but it is classified as a single-premium traditional annuity. It is an annuity because it meets the strict insurance department requirements for interest guarantees and guarantees against loss of principal, and it provides traditional annuity benefits. Let’s look at what makes this such an attractive savings option.

No-Loss Provision

This means that once a premium payment has been made or interest has been credited to the account, the account value will never decrease below that amount.

Interest Guarantees

Most policies have a cap (the maximum interest rate that can be credited to a policy in a policy year). The cap rate can vary from no cap to a fixed percentage, but the floor is zero. This allows the policyholder to benefit from potentially high returns and be guaranteed at the same time that no money will be lost.

Competitive Rates of Return

With concerns over inflation and making sure that investments will meet our future needs, many people have turned to the equity market for higher returns. It makes sense when you consider how well the stock market has performed historically.

Traditional Annuity Benefits

Notable among these are tax-deferred growth and yearly withdrawal of funds without penalty. This early withdrawal is usually conditioned upon the annuitant’s death or admittance to a nursing home. Heirs receive every penny upon death.

Boost Income

An optional income rider will provide a large monthly income stream until you die even if the account goes to zero. If you live to 100, you still get a check. If income will be lost when a spouse passes away (pension, Social Security), the income account will grow and be there when you need it the most.

Health Care in Your Golden Years

No one wants to go into a nursing home or lose all of their hard-earned money to a nursing home. There is one very good annuity that will provide a substantial amount of money for up to five years for critical healthcare. You can use the money for home healthcare, assisted living. or a nursing home. There is no underwriting, so everyone, regardless of health, can qualify for this benefit as long as they aren’t currently in a facility. If this benefit isn’t used, heirs receive all the money in the annuity. Call for more information.

Fixed index annuities typically offer other benefits that are not generally included in traditional policies: a 100 percent money-back guarantee, no front-end sales charges, and no annual management fees or administrative fees.

Overall, fixed index annuities are performance-linked to the S & P 500, Dow, NASDAQ, S & P MidCap, Russell 2000 stock index and other assorted index funds. They allow you to participate in market performance.

Seek a fixed index annuity expert before you invest. There are only a few that are worth owning. For more information on which is the best fixed index annuity for you and for how they compare to a costly and risky variable annuity, call us today at 440-865-2266.

Scroll to top