Fixed Index Annuities: Guarantees plus growth potential



Fixed Index Annuities: Guarantees plus growth potential | |

|  |For one of the very few times since the Great Depression, burying your money in a coffee|

| |can has looked pretty good to a lot of people. When the stock market bubble burst in |

| |2000, many consumers watched in shock as their equity values melted down like an ice |

| |cube in the desert. Moreover, retirees who rely on fixed interest vehicles to cover |

| |monthly expenses still stare in disbelief at the very low savings yields offered by |

| |nearly all forms of such vehicles. |

| |The double whammy of rocky equity markets along with interest rates touching modern day |

| |lows, has left a large number of people financially battered and bruised. Equity |

| |investing appeals to consumers because it offers the potential for higher gains than |

| |fixed interest vehicles, however the potential for gain comes with risk. Fixed interest |

| |vehicles are appealing because they offer safety. The result is people can be forced to |

| |pick their poison—higher performance or greater safety. That's where a Fixed Index |

| |Annuity (FIA) can offer a solution. |

| |An FIA helps move the gain vs. risk proposition to middle ground. It guarantees to |

| |credited interest principal and, by linking interest crediting to the performance of one|

| |or more market indexes, it offers the potential for growth. Yet principal is never |

| |exposed to market risk. The potential for growth without sacrificing guarantees to |

| |principal—that's the value proposition offered by an FIA. |

| |Because an FIA is not a direct investment in either an equity or debt security (stocks, |

| |bonds, or index options), it does not offer the full gains of any equity market index. |

| |FIA products feature multiple combinations of benefits and provisions, and numerous |

| |indexing crediting methods are employed. Of course, because the market indexes will not |

| |always register a gain, an FIA will not always perform better. Moreover, the typical FIA|

| |places some type of limit (cap) on interest credited during a specific time |

| |period—annually, monthly, etc. Once interest is credited however, it is locked-in, |

| |whether future market index performance is positive or negative. Remember that annuities|

| |are intended to meet long term needs for retirement income. Surrender charges may be |

| |assessed if money is withdrawn early. |

| |Many FIAs offer the flexibility to link interest crediting to a choice of market |

| |indexes, and some also offer a fixed interest option, along with the ability to adjust |

| |allocations periodically. In addition, FIAs often allow penalty-free withdrawals, up to |

| |certain limits. |

| |Today Allianz offers a portfolio of contracts designed to meet a variety of financial |

| |goals and needs. |

| |An FIA may not be suitable for everyone. However, this type of annuity does offer a way |

| |to avoid having to choose between investing risk and the potentially lower yields of |

| |fixed interest vehicles. An FIA just could be a solution for you. |

| |Any distributions are subject to ordinary income tax and, if taken prior to age 59½, a |

| |10% federal tax penalty. |

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