How Does a Fixed Index Annuity Work?At the end of the year, a Fixed Index Annuity will credit you with all of the growth of the index up to a predetermined limit. That ceiling might be an annual or a monthly cap, or a percentage of the growth of the index. In other words, if the annual cap were 9% and the index grew 12%, you would be credited with 9% interest for the year and that interest would be added to your annuity and would "lock in". Your principal is guaranteed against market risk from day one and your interest gains lock in each year on your contract anniversary and cannot be taken away in future market downturns. In other words, you can participate in a percentage of the upside of a major market index, but you are never exposed to any of the downside market risk! At the end of the year, you will never have lost money in the market because a Fixed Index Annuity is not a stock market investment, but rather is a fixed financial product backed up by an insurance company with interest gains linked to a percentage of a market index. They are not designed to "beat the market" but to give you a better than average opportunity for a better than average rate of credited interest on your money. Important Point to Remember: There is no such thing as a "free lunch". You give up some of your upside potential in return for the safety that the annuity provides. The NAIC "Buyer's Guide to Fixed Annuities" is a great tool to help you determine suitability. Click here to fill out the request form and we'll send you a copy free of charge. Notice: Learn more about our team and why you may want to consider contacting us. We are a Maryland-based business for local residents but we can also direct you to the appropriate agent in your area regarding the same strategies that we offer to improve your safe money management plan. Your future and your family will thank you for it! |
Randall Roberts |
|