Many of you may not realize that as a licensed insurance advisor, I also offer my clients the option to invest their money in fixed annuities and fixed index annuities. Usually it is because people like you, and like me, want to find a good rate of return on their money. We also don't want to lose our money while trying.
We together insure your car against accidents and loss.
We insure your home against theft and mother nature's wrath.
Why not be able to insure your money as well??!
There's a quick answer to the above question "What the heck is this fixed index annuity stuff." There is also a long answer.
I will give you both and then tell you that the best option you have is to simply ask me about it given your specific needs and available money to invest.
The quick answer: A fixed index annuity is a way to transfer the risk of losing money to an insurance company. The company itself depends on who provides a competitive, clean product with good rates for you at the time. I have most often used companies such as Jackson National Life and Symetra but can use any firm that is competitive.
That company then guarantees you that you won't lose any money while you have the money invested with them. In fact they guarantee you that will be grow every year with them. The company will also let you invest in an index that is tied to the market, usually the S&P 500 index, for a chance to get a little risky in the market without the gamble of losing your hard earned money.
So: the "fixed" part of the name: you have a fixed guaranteed growth rate for the time frame you select. Unfortunately they are based on the current treasury interest rates which are at historic lows right now.
The "index" part of the name: you can participate in an index without the risk. Because the insurance company is taking all of the risk for you (by guaranteeing you that you won't lose any money), they limit how much you can earn in that market. They call this a "cap."
For example, you decide to invest a one time amount of $20,000 in a fixed index annuity. You choose a six year time frame for the investment (you usually can choose between 5 & 12 year time frames)
The fixed component guarantees you that you will earn a certain percentage, we will say 1% for discussion. So your $20,000 is guaranteed to grow by 1% compounded interest rate every year which means that you'll have at least $21,230.40 at the end of the five years.
The index component will let you invest in the market but may cap you on a 5% return each year (just picking an example).
For example, you earn 3% in the market one year. You get the full 3%.
You earn 10% in the market. You are capped at 5%.
If you are investing with cash, these also have the added benefit of tax deferral! So you don't pay any taxes on this money while it's growing.
And, the great news, these are FREE. they don't have any fees associated with them. If you want to add additional provisions for lifetime income, then a fee would come into play but I don't use those often.
Confused and wondering if this is a good option for you?
Simply call or email me.
David Flanigan
Flanigan Insurance Agency
Town & Country, St. Louis, MO
314.727.6000
dflanflanins@yahoo.com
Posted Thursday, September 29 2016 1:24 PM
Tags : fixed index annuity, st louis fixed annuity, st louis fixed index annuity, st louis insurance, guaranteed investment
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