WHAT IS A FIXED INDEX ANNUITY?

A Fixed Indexed Annuity (FIA) is a safe-money retirement product that protects the client from market losses while giving them the ability to earn interest based on a market index (like the S&P 500).

Think of it as a retirement safety vehicle with upside potential and downside protection.

How will I benefit from a Fixed Index Annuity?

Fixed Index Annuities (FIAs) offer several benefits, making them appealing to those seeking a mix of growth potential and protection. Here are some key benefits:

1. Principal Protection

With more than 40 carriers our main focus is to find the lowest premium with a carrier that you would qualify for.

3. Tax-Deferred Growth

The growth of your investment is tax-deferred, meaning you don’t pay taxes on your earnings until you withdraw them. This can allow your investment to grow faster over time because you’re earning returns on money that would otherwise be paid in taxes.

5. Customizable Features

FIAs often come with optional riders, such as lifetime income riders or death benefit riders, which allow you to customize the annuity to better suit your financial needs. These features typically come at an additional cost but can provide added flexibility and security.

2. Growth Potential with Market Indexes

While your investment is protected from losses, FIAs offer the opportunity for gains based on the performance of a market index (like the S&P 500). However, your gains are subject to caps, participation rates, or spreads, which limit the amount of the index's return that you can receive.

4. Income for Life

FIAs can provide a guaranteed stream of income for life, either immediately (if it's an immediate annuity) or after a deferral period (if it’s a deferred annuity). This makes them an attractive option for retirement planning, as they can ensure you don’t outlive your savings.

6. No Direct Investment in the Stock Market

While FIAs offer returns based on market performance, they are not directly tied to the stock market. This limits exposure to risk while still allowing for potential gains.

7. Liquidity Features

Some FIAs allow for partial withdrawals without penalties, depending on the contract terms. There is often a penalty-free withdrawal amount each year, typically around 10% of the contract value.

8. Inflation Protection (Potentially)

While FIAs offer returns based on market performance, they are not directly tied to the stock market. This limits exposure to risk while still allowing for potential gains.

9. Death Benefits

Many FIAs include a death benefit, allowing you to pass on the remaining annuity value to beneficiaries, often without going through probate.

10. No Annual Fees

Unlike variable annuities, FIAs generally have lower or no annual fees, making them more cost-effective for long-term growth.

In Summary

These benefits make FIAs attractive for those looking for conservative, growth-oriented investment options with built-in security. However, it's important to weigh these against potential drawbacks such as capped growth, surrender charges, and liquidity constraints.

Looking for more information?