What Is an Indexed Annuity?
A Fixed Indexed Annuity is an investment that is intended to give the investor, a lifetime income, or an income for a certain period of time. There are immediate annuities which start paying income in year 2, and those that the investor will pay into for an amount of years before income starts.
Indexed Annuities funds are following the stock market index, much the same way and IUL, and credits interest according to the percentage of gains in the market. The money in an annuity isn’t invested in the stock market, rather it is being credited accordingly. You will never lose your money in an Indexed Annuity, because when the market is down, your funds are flat at 0% or gaining 1%, whatever the floor is outlined in the annuity. Please see graph below.
Annuities are normally funded at the beginning or near retirement, with funds that are rollovers from 401Ks or IRA accounts. These are referred to by the insurance company as qualified funds. In other words, 100% of these funds or qualified to be taxed when distribution starts. The other is non-qualified funds. These are savings accounts, Roth IRA, or inheritance. These monies have already been taxes once, and at distribution, only the gains are taxed.
These annuities can be either single or joint policies and they also have a death benefit. Be prepared to give the carriers by way of the agent information regarding available cash on hand, to cover 6 to 9 months of mortgage payments, and other emergencies.
The following graph indicates the performance of an Indexed Annuity over 19 years, and it clearly out performs the stock market.
Annuities are highly regulated by the States that they are written in. Agents are required to do what is best for the client, no matter what the agent receives as payment. We have strategies that will recoup your original investment that you can leave to your heirs, while receiving a lifetime income. If you have money to invest, or a rollover to consider, click the button below for an agent to get back with you.