Understand the Benefits
Understanding the Benefits
of Annuity Income
The benefits of annuity income differ from product to product.
For example, the level of protection that they provide. Additionally, whether or not an annuity is right for you depends on your unique financial situation and needs. It’s important that you know all your potential options.
Many retirees forget to factor things like taxes and the rate of inflation into their budget for retirement. However, these details are far from trivial. But certain products, such as annuities, do come with benefits that can help you with them.
Options and Benefits of FIAs
In order to make the right retirement decisions, you need to understand as much as you can about your options. Could a fixed indexed annuity, or FIA, be the right choice for you? We can help you find out.
The first benefit of an FIA is that it can help you keep your money safe.*
An FIA is an insurance product, and the insurance company is required to keep your principal safe in the terms of the contract. Because of this, it’s important to select a reliable one. Thankfully, we can direct you towards trusted and reliable insurance companies.
Secondly, an FIA may offer you a reasonable rate of return** on your money.
It grows based on the performance of a stock market index or indexes. However, you won’t lose the money in your annuity in the event of a stock market drop.
And third, choosing fixed indexed annuity income tends to offer a straightforward, simple approach to retirement.
With an FIA, you don’t have to spend time tracking market trends or worrying about losing all your money.
Specifics on an Annuity Contract
An FIA is a contract with an insurance company, as we stated. First, you contribute a set amount of money. Then, the company keeps that money protected, while it gains interest based on the performance of an index. The time during which you let the money grow without touching it is known as the accumulation phase, and typically lasts five to ten years. However, it could be longer depending on the terms of your contract. When this period ends, the distribution phase starts, and you may take the money as income payments.
Annuities and the Stock Market
Of course, an FIA has the benefit of protecting your principal. If the stock market goes down, you won’t lose any money.* There is a “floor” that the annuity’s value cannot dip below. Of course, this benefit is backed by the claims-paying ability of the insurance company.