Understand The Basics
Are you unsure as to what an annuity is? You aren't alone on that.
Many people aren’t aware of how these products work, and the benefits that (some types of them) come with. We can help you in the objective of understanding annuities. If you have any questions, you can give us a call.
Not All Annuities Are the Same
Not all annuities are the same. But, they do have a few key things in common.
Every annuity has some kind of option for receiving income. While not all annuity owners will use this benefit, many do. Another thing all annuities have in common? They’re all a contract between the owner and an insurance company. It’s the terms of that contract, and what type it is, that makes the difference.
Understanding Annuities: Different Types of Annuities
Not all annuity products are the same, as we said. There are three main types of annuities. These types do have, however, a variety within them depending on the individual product. The three main types of annuities are: fixed annuities, variable annuities, and fixed indexed annuities (FIAs.)
With a fixed annuity, policyholders get a fixed interest rate on their money. This option provides a regular rate of return. But, there’s no potential to increase your rate. Variable annuities, on the other hand, allow for potential growth. But, your money is at risk. Fixed indexed annuities, finally…
Fixed Indexed Annuities
An FIA is very different from a viable of fixed annuities. An FIA is, in a sense, the “best of both worlds.” Like a fixed annuity, it provides protection of principal. However, like a variable annuity, it allows for potentially higher gains over time. Protection, reasonable rates of return,** and other benefits, all from one product.
Essentially, with an FIA, you contribute a certain amount of money, which the issuing insurance company keeps set aside in a reserve. Then, the accumulation phase begins. Your money grows, based on the performance of a stock market index or indexes, while still being kept safe. When this phase ends, the distribution phase starts. During this phase, you can receive income from your FIA. Additionally, an FIA allows for tax deferral. And, if you select an income rider, it may grow at a rate that compensates for inflation. You can learn more about all of these benefits by reaching out to us or attending a seminar event.
Are There Any Downsides to an FIA?
Like any retirement option, an FIA isn’t for everyone. No financial vehicle is “one-size-fits-all.” Everyone has different priorities during retirement. But, if your main priority is safety, and you also value reasonable rates of return,** then an FIA may very well be beneficial to you. Reach out to us for a one-on-one meeting, or to attend one of our educational seminar events.
Reach out to us to learn more about annuity basics
Or, you can attend one of our no-cost educational seminars, which come with a complimentary gourmet meal.