Fixed Index Annuities
What Is a Fixed Index Annuity?
A fixed indexed annuity represents a long-term, tax-deferred investment solution that offers both principle security and potential for growth regardless of short-term market fluctuations. Compared to a variable annuity, it carries less risk and offers lower returns, but it has greater growth potential.
Investment returns are calculated according to a fundamental index, like the S&P 500 Composite Equity Price Index, which is comprised of 500 equities chosen for their diversification potential and their ability to represent a large cross-section of the market. While the standard index does track the market, your capital is never put at risk by being invested directly in the stock exchange.
Benefits Of FixedIndex Annuity
Tax deferral
You can take advantage of compound interest without incurring taxes on your gains.
Principal Protection
Your initial deposit will remain unchanged no matter how poorly the index does. You should know that the potential of the providing insurance agency to pay out claims remains a condition of all guarantees.
Lifetime Income
For an increased premium, you can purchase a “rider” that ensures you and your partner (if applicable) will get a fixed amount of money each year until you pass away. Alternatively, you can annuitize and receive steady payments for the rest of your life.
Earnings Credited
Gains are credited after every term and could be impacted by poor index performance at that time. Nevertheless, the policy’s range or cap rates can restrict profits. During the term of your policy, you may be able to profit from index highs with certain carriers.
Beneficiary Protection
You can save your heirs the expense of probate by leaving your possessions to them directly. You can increase the potential payout to your heirs by purchasing extra riders for an increased fee.
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