What are the benefits of a fixed index annuity?

A fixed indexed 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 annuity along with less risk and less potential return than a variable annuity.

What is the specified floor for indexed annuities?

In most fixed indexed annuity contracts, the floor is 0\%. According to FINRA, state insurance laws also require fixed index annuities to pay a guaranteed minimum rate of 1-3\% on 87.5\% of the paid premium dollars.

Are fixed indexed annuities safe?

Unlike index funds, fixed index annuities are generally protected against loss of principal. This means you won’t lose any of the money you put into a fixed index annuity. This protection against losses, however, comes at a cost. You won’t receive the exact return of the market index.

Can you lose money in an indexed annuity?

You Can Lose Money While indexed annuities are considered more conservative than variable annuities—and make a selling point of their guaranteed return—they nonetheless carry risks. One is if you need to get out of the contract early because of a financial emergency or other pressing need.

Is a fixed indexed annuity a good idea for seniors?

Should You Get a Fixed Index Annuity? If you’re investing for the medium- or long-term, and want some market exposure with less risk, the fixed index annuity could be a good compromise. Your long-run potential return is higher than if you kept all your money in a guaranteed account, like a fixed annuity or a CD.

Is a fixed annuity a good investment?

Annuities can provide a reliable income stream in retirement, but if you die too soon, you may not get your money’s worth. Annuities often have high fees compared to mutual funds and other investments. You can customize an annuity to fit your needs, but you’ll usually have to pay more or accept a lower monthly income.

Are fixed annuity a good investment?

What is a fixed indexed annuity?

A fixed indexed annuity is a long-term investment that allows your assets to grow tax-deferred, and for an additional cost, offers an optional guaranteed lifetime withdrawal benefit (GLWB) that provides a guaranteed “retirement paycheck” for you and your spouse that is guaranteed to grow each year income is deferred (up to 10 years).

Is an indexed annuity a good fit for someone like Hallie?

An indexed annuity is a good fit for someone like Hallie because these annuities offer a low-risk way to generate predictable income. She’s guaranteed not to lose money, so it’s a lower risk investment than a variable annuity, which would expose her to downturns in the stock market.

Are indexed annuities a good choice for people with no pension?

Many people with no pension to count on and only a modest expected income from Social Security know they need to make smart decisions about their retirement savings and investments. Thus, when a salesperson pushes them toward indexed annuities, they’re quickly convinced, and sign up.

Do indexed annuities have a minimum interest guarantee?

Many indexed annuities have a minimum interest guarantee, meaning your principal is protected from market volatility. Indexed annuities have a history of being oversimplified by the agents selling the products, but indexed annuities are complicated financial products.