FIXED INDEXED ANNUITIES
combine the
features of Fixed Annuities — including tax-deferred
accumulation, a minimum guaranteed interest rate, and guaranteed
income at retirement — with interest crediting options that give
a better rate of interest when equity market indices increase in
value.
INTRODUCING FIXED INDEXED
ANNUITIES
Since becoming available in
America over two centuries ago, Traditional Fixed Annuities have
been helping people from all walks of life prepare for a secure
retirement. With their combination of tax-deferred accumulation,
minimum interest rate guarantees, and lifetime income options,
Fixed Annuities have long been an important — and most would
agree conservative — component of many Americans’ financial
portfolios.
Fixed Indexed Annuities
(issued only by life insurance companies),
are a unique type of Fixed Annuity which offer your clients many
of the same features, benefits, and guarantees of traditional
Fixed Annuities, plus the potential for higher
interest crediting.
The purpose of this article is
to help you understand what Fixed Indexed Annuities are; how
they work; who your ideal prospects are; and how they can help
your clients achieve their retirement asset accumulation
objectives as part of an overall asset accumulation strategy.
WHAT ARE FIXED INDEXED
ANNUITIES?
Fixed Indexed Annuities are
probably best described as "Fixed Annuities with an interest
crediting option linked to an outside index".
In other words, Fixed Indexed
Annuities combine the features of a Fixed Annuity — including
tax-deferred accumulation, a guaranteed minimum value, and
guaranteed income at retirement
1
—
with an interest crediting
option that generally gives contractholders a very competitive
rate of return over the long term, particularly when the market
indices are increasing in value.
This interest crediting is
called an Indexed Strategy, and it links the amount of interest
credited to the annuity to the performance of a specific index;
for example, the Standard & Poor’s 500
®
Stock Index (S&P 500®).
Fixed Indexed Annuities give
contractholders a choice. Depending on their needs and personal
tolerance for risk, contractholders can select a traditional
"declared" rate of interest,
or they can select
one or more indexed strategies, or both.
So now you ask
yourself, What are the Primary Benefits of a Fixed Indexed
Annuity and we have the answers for your
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