Q- Are all Annuities the same?
A- No, there are a multitude of annuities on the market issued from numerous life insurance companies. There are Variable Annuities, Fixed Indexed Annuities, Period Certain Annuities and others. Just like in the case with most everything, from doctors to auto mechanics, there are “good annuities and bad annuities”.
Q- What is a Fixed Indexed Annuity?
A- At its core, a Fixed Indexed Annuity is a “living benefit” life insurance contract. Fixed Indexed Annuities are relatively new, and provide the owner quite a bit of flexibility. You cannot lose money in a Fixed Indexed Annuity but you can still participate in market gains.
Q- Are Fixed Indexed Annuities safe and insured?
A- Yes. There are several safeguards to investing in life insurance companies. Please visit www.safemoneyplaces.com/annuity.htm for a detailed third-party discussion. Every life insurance product (Fixed Indexed Annuities are life insurance contracts) are federally regulated. This means that the U.S. Government requires that insurance companies maintain $1 in a policyholder reserve account for every $1 that the insurance company is at risk with an insured's money. Also, the U.S. Government requires that life insurance companies "cross insure one another" making it unwise for any insurance company to willingly facilitate another insurance company to "go out of business". Lastly, the U.S. Government requires that every State of the Union have an "Emergency Fund" that insures contracts up to $300,000 in some States. Each licensed insurance company within the State must contribute to this fund. No person has ever lost money in life insurance since its inception over 150 years ago.
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Q- Do you offer Variable Annuities?
A- We could, but we don’t. Our middle name is “Guaranty” and Variable Annuities can lose value if, and when, the market goes down.
Q- What other benefits can I expect from a Fixed Indexed Annuity?
A- Fixed Indexed Annuities allow you to participate in market gains but you never lose when the market declines. In effect, every year (from your anniversary date to anniversary date) that your account gains from the market, its value is “reset” to the new higher amount and can never go below the “set” point.
Q- What is an “Income Rider”?
A- Most Fixed Indexed Annuities either automatically come with an Income Rider or offers them as an option. What the Income Rider provides the annuity owner is the option of determining when (as early as the first anniversary year or several years later) to effectively “turn on income”. This income, once turned on, is a guaranteed payment for the rest of the annuity owners life. Each year that the income is deferred, the annual amount significantly increases (see Lifetime Income Benefit Rider chart).
Q- What kind of fees can I expect when purchasing a Fixed Indexed Annuity?
A- There are no management, brokerage, maintenance, transaction, processing, or any other fee in a Fixed Indexed Annuity, for the life of the contract. All of your money works for you.
Q- Why are Fixed Indexed Annuities better than Mutual Funds?
A- Please see a recently published 16 Reasons CPAs.pdf by a nationally known accountant.
