Fixed index annuities (FIAs) are annuities tied to a market index that allow you to earn when markets go up but protect you from actual loss when markets go down. Since you are not directly invested in the markets and are only following an index as a benchmark, these insurance vehicles can act as a form of insurance against market losses. Their appeal to the retiree is protection against loss and market fluctuations never affecting principal, in a negative year you would stay level and any interest credited could not be taken away, so your savings are kept safe.
At Retirement Prosperity Group We Call These Products Retirement Plan Insurance.
Most of us insure our $400,000 homes, our $35,000 cars, our health and some of us insure our lives with Life Insurance. But what about our retirement accounts? The money that we are counting on to carry us through the rest of our lives; the money we cannot live without. Why do we leave this money at risk, tied to the fortunes of Wall Street with risk and ever increasing volatility?
The truth about FIAs
Is there any one perfect investment? Is any single thing perfect for everyone?
Of course not. So we won’t paint a picture about how perfect a fixed indexed annuity could be for you. These annuities allow you to participate in market like rewards without the risk. Full downside protection.
However there are things you need to know about them. They are not built to outperform the market and no matter what you have heard on radio or TV these are not built for 8% returns. They are built to protect principal, give you a reasonable rate of return over time and lock in gains you have made so you cannot lose the interest that is credited.
So these are usually offered to people who want safety.
Two main points to understand:
First, all annuities have a time commitment – a period of time you are expected to keep your money in them. Like a CD, if you bought a 5 year CD that is your time commitment. Unlike a CD, however, the annuities we offer have access to 10% of your money every year without any fees or penalties.
Second, is that you have a cap – a maximum interest that you could earn in any given year. Let’s say as an example the cap was 5% if the market went up 5% you could get that interest, but if the market went up more you would be at the 5% cap.
The upside cap also buys you downside protection. Because let’s say the market went down 5, 10 or 15% you would be protected. You can basically consider that your cap on the upside buys you full downside protection. That is the trade-off in a Fixed Indexed Annuity (FIA).
If you want to know more about FIAs please call us for a no-cost and no-obligation consultation to find out if they are right for you.
CALL 1-855-SAFE-006 (855-723-3006)