Ask Before You Leap When Considering An Annuity

According to a recent CBS news report, the sales of fixed index annuities reached a staggering $19.2 billion in the USA for the fourth quarter of 2016. There has been an evident rise in the interest of the public towards the fixed-index annuity, as the sales of this plan for the same quarter last year were $6.3 billion.

What makes the fixed indexed annuities the hot favorite package for citizens? The answer is straightforward; it comes with the best features any traditional annuity scheme could have.

While most of the annuity schemes have complex procedures that are hardly comprehensible to the public, this plan works on one basic principle- guarantee of the principal.

Moreover, the fixed index annuities are free of any market-loss worries and the owner of this plan can freely participate in the market-indexed interest. This means that the annual will receive the fixed annuity regardless of the market fluctuations. These features, added with the lifetime income guarantee and the potential of growth linked to the stock market make it one of the favorite annuities among all.

Also referred as equity indexed annuity, this plan acts as a powerful financial tool to cater to the long-term needs of retirement life.

Although all of the features mentioned above seem interesting, it is wise to understand any financial investment before making decisions. This article provides useful information about the areas that should be considered before deciding on buying a fixed index annuity.

Financial strength and safety

As mentioned earlier, equity index annuity is at its best when it comes to the safety of the principal. The Customers prefer fixed indexed annuity to other annuities and mutual funds because its returns are always predictable and exactly according to the agreed plan. A minimum amount of interest is fixed while signing the deal and a customer keeps receiving it even if the market has crashed.

There is no other safe and predicable financial tool that is unaffected by the market fluctuation. Therefore, this plan is the safest financial agreement you could have in order to secure your retirement life.

Potential Growth of Money

Unless you withdraw the money, your annuities will continue to grow without any tax deductions. This means that your money will grow more rapidly as you will have ‘extra’ money to earn from that would have otherwise been deducted as tax charges. This extra money, combined with the principal, allows your finances a rapid boost.

Availability of Money

There are a few fix index annuity contracts in the market that allow withdrawals without any penalties. These contracts can cover up to the 10% withdraws annually; so, when it comes to the growth potential of the money under the fixed index annuity agreement, it stands apart from the competition.

Benefits

Apart from the principal safety and minimum interest guarantee, a fixed index annuity provides you the perfect opportunity to cash the benefits of market growth, without being affected by its potential downfall at times.

However, it should be noted that the exact rate of interests or income are not expected as these interests pass through various financial algorithms that play their part in saving your principal in the time of the market recession.

Income Uses

Time is gone when people had to decide between two main financial products; either choose the safety of your principal and keep yourself out of the market performance, or put your money directly into the market in order to receive greater incomes; and greater losses too if the market had a bad session.

No wonder fixed index annuity is growing in the popularity more than any other financial product because it has the features of both the plans while keeping you away from any potential losses.

The features of an annuity plan discussed in the article above are a scale on which any plan should be measured for its credibility; and so far, fixed index annuity plans remain on top of it.

Summary:

Annuities can be one of the smartest option for retirement income, it all depends on your personal situation and your goals.  Make sure the advantages of an annuity match up to what you wish to accomplish.

This article sheds light on the factors that have made fixed index annuity plan one of the most popular financial tools. This article also highlights the questions that should be asked from any advisor who suggests this plan.

By | 2017-10-23T02:59:11+00:00 March 13th, 2017|Annuities|

About the Author:

Rick J. Hahn
Rick has helped thousands of people find the safest approach to a stable and satisfactory retirement. Rick is a Certified Retirement Financial Advisor (CRFA), has been advising retirees for over two decades in Safe Money and Lifetime Income strategies. Web Site: safeharborfinancial.retirevillage.com