Features of Fixed Indexed Annuities

By Cindy Reed, Midland National Life Insurance Company

When planning for retirement, your options can seem overwhelming. The good news is, there are many great products available for people in varying stages of saving. Fixed indexed annuities are one of the products that deserve consideration for part of your retirement portfolio. Here are a few of the benefits:

  • Steady, guaranteed lifetime income.  Fixed indexed annuities are one of the only products that can create a lifetime income stream that cannot be outlived.  This can be very important to consumers who are seeking steady, consistent income no matter how long they live. 
  • Guarantees.  Generally, fixed indexed annuities have minimum guarantees which are backed by the issuing carrier, so while the value of a fixed indexed annuity can increase due to market growth; it will never decline due to a decline in the index or due to a market downturn.  Because they offer the certainty of no loss of premium due to a market downturn, even in a tough economy, fixed indexed annuities have weathered the financial crisis better than many other financial products.
  • Balance. Protect your premium while having upside potential through market-linked growth. Once interest is credited, it compounds annually and can never be lost due to interest rate adjustments or negative fluctuations in the market.  Keep in mind, the time horizon for when income is needed is an important consideration because an early surrender of the contract may cause surrender penalties to be incurred.
  • Tax Deferral. Tax-deferred growth often means a greater return on money over time.

With fixed indexed annuities, consumers can feel confident they are making a sound choice as part of a diversified retirement portfolio. In addition, the fixed index annuity industry is committed to following the new National Association of Insurance Commissioners (NAIC)  suitability requirements, whereby  insurance companies are required to review every sale to make sure that the products are appropriate for the consumer, taking into consideration factors like age, income and tax status and to ensure that producers are trained to sell these products. Talk to your retirement planning professional to determine the best products and strategy for you and your family.

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