Equity Indexed Annuities,annuity, sell annuity, index account, annuity advantages, annuity vs market, Index Annuity

Equity Indexed Annuity Expert 

(your stockbroker hates me)       

     Having been in the Annuity, Life Insurance and Retirement Plan business for over 35 years, having sold, serviced and owned well over 100 million of dollars of life insurance and annuities, I can truthfully say I've just about seen it all when it comes to insurance, retirement plans, retirement accounts, 401k plans, IRAs, SIMPLE IRAS, SEP accounts, investment choices and even structured settlement annuities.

     There is one product that stands out and that's the Equity Indexed Annuity. This is a "fixed" annuity, in the legal sense of the word. But dont let the term "fixed" allow you to think of the old, fixed interest rate annuities of the past. True, there is an element of the equity indexed annuity that we could call "fixed", in that sense of the word. But when referring to a fixed annuity, it's meant to differentiate it from a "variable" annuity, which is a security...and one which I personally wouldn't sell to my worst enemy because they are usually loaded with hidden fees, unlike the EIA.

     An Equity Indexed Annuity is NOT a mutual fund, not a variable annuity, nor any instrument that participates directly in stock, bond or other equity investments. Unlike mutual funds and stock or equity investments, the EIA ( equity indexed annuity) is an annuity with important insurance features, such as the tax deferral*, Death Benefit, and annuitization features. They also differ from variable annuities in that they offer protection from market loss, a feature not always found ( rarely, in my opinion) in variable annuities. In essence, if you're looking to protect your cash and earn a nice annuity interest rate, minimize taxes (when possible), and not ever lose a dime, nor a minute's sleep, the equity indexed annuity is an insurance product you should seriously consider for your long term savings or retirement account. The annuity interest rates will please you.

    The equity indexed annuity is technically classified as a "fixed" annuity. Here are the advantages of a high quality fixed annuity:

 

1. Safety of principle. While in the accumulation phase, there will NOT be any fluctuation in the value of the annuity's value other than compound interest being added to it.

2. There are not any fees, charges or hidden amounts taken from your account each year unless you make an early withdrawal. ( we'll get into those later).

3. They can provide a steady, safe, secure monthly income to you that you CANNOT outlive. When set up properly, one can live to be 120 years old and even older, yet still receive your annuity income each month without fear of exhausting your principle.  Try that with a mutual find or bank account.  They wont guarantee it not to run out. The annuity will.

4. During the accumulation phase ( before withdrawals begin), the interest earnings are compounding on a tax deferred basis*, allowing your annuity to grow more rapidly.

5. Normally, the interest rate is much higher than what you would receive from a bank CD or savings account. In fact, there is always an underlying MINIMUM interest rate Guarantee for the life of the annuity...but it's normally much higher than the stated minimum.

6. If the annuitant's death occurs prior to withdrawal, the annuity will pay the entire balance to his named beneficiary, thus AVOIDING probate in many cases.

Now let's add the Equity Indexed feature to a fixed annuity:

 All of the above benefits, PLUS:

7. The interest rate crediting,( at the annuity owner's option), can be linked to track a major stock market index, such as the S&P 500 index ** without fear of losing any of the principle balance.

In other words, if you choose to track the S&P 500 index ** with your indexed annuity , your annuity will take advantage of most stock market gains, yet NONE of the market's losses.

Up Next:  401K Rollover -why use an EIA ?

 

More Annuity Questions Answered by the Indexed Annuity Expert

 

 * Annuities owned by trusts or corporate entities do not generally enjoy the tax deferral feature. We do not give tax or legal advice. Please consult your tax or legal advisors for your particular circumstances.

** The trademark " S&P 500" is owned by McGraw-Hill  and is in no way affiliated with this website, it's owners nor it's hosting service. Any references to it on these pages are for illustration and informational purposes only.