Fixed Index Annuity

Fixed Index Annuity

A fixed index annuity is a tax-deferred, long-term savings option that provides principal protection in a down market and opportunity for growth. It gives you more growth potential than a fixed index annuity along with less risk and less potential return than a variable annuity.

Returns are based on the performance of an underlying index, such as the S&P 500® Composite Stock Price Index, a collection of 500 stocks intended to provide an opportunity for diversification and represent a broad segment of the market. While the benchmark index does follow the market, as an investor, your money is never directly exposed to the stock market.

Fixed annuities are contracts purchased from a life insurance company. They are designed for long-term retirement goals. Withdrawals are subject to income tax, and withdrawals before age 59½ may be subject to a 10% early withdrawal federal tax penalty.

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  • Variable Annuity
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Fixed Index Annuity

What are the benefits?

Tax deferral. Its tax-deferred status allows you to benefit from compounded growth.

Principal protection.

The original deposit will not decline if the index performs negatively. Please keep in mind, though, that all guarantees are subject to the claims-paying ability of the issuing insurance company.

Lifetime income

A rider is often available for an additional cost to guarantee set payments regardless of how long you and your spouse (if elected) live. Or, get lifetime income through annuitization at no additional cost.

Earnings credited

At the end of each term, earnings are credited; at that point, they may be affected by negative index performance. Earnings can, however, be limited by the policy’s spread or cap rates. Some carriers may offer a feature that allows you to take advantage of index highs during your term.

Beneficiary protection

You can pass assets to beneficiaries and avoid costly probate. Optional riders, available for an additional cost, can enhance the amount your beneficiaries may receive.

Spousal opportunities

Most companies offer spousal continuation only upon the first spouse’s death and don’t pay a death benefit out until the second spouse passes. However, some carriers do offer a joint option that may cover the death of either spouse upon the first passing.

Flexibility

Growth potential can be achieved through the performance of the index or through a fixed interest rate earned on the fixed account — or a combination of the two.

Bonus

Some companies offer bonuses up to 15% for rolling over your Qualified accounts (401ks, 403bs, 457s, IRAs, TSPs etc.) and Non Qualified accounts ( money in the bank)

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