Fixed Indexed Annuities – Too Good to be True?
The Fixed Index Annuity is also referred to as an equity indexed annuity. It allows for the possibility for upside appreciation in the stock market, but protects against losing principal due to unexpected market changes.
Does this sound too good to be true? Gain without loss? Many people initially brush fixed index annuities aside as a gimmick or don’t take a minute to understand how they work. Don’t sell yourself short though- they are well worth investigating because if you like what you learn they might have a place in your portfolio.
Is a Fixed Index Annuity Right For You?
Fixed index annuities are a good deal, but only for the right investor and the right reasons
The typical buyer of a fixed index annuity seeks the potential for growth without risk of loss, values principal protection, and appreciates tax deferred compounding of their investment
Fixed Index Annuity Highlights
An indexed annuity balances the safety of a fixed deferred contract with the potential for gains of a market based investment.
While historically it’s true that the stock market offers the potential for higher returns, that upside always comes with potential risk.
Fixed index annuities offer a way for a conservative investor to safely use a fixed interest product that prioritizes safety and protection of principal, that has the potential for higher returns than traditional fixed investments with no risk of loss.
Naturally, you give up some upside in exchange for the downside insurance, but overall they are a very good, safe money option.
Who the Fixed Index Annuity Is Right For?
An indexed annuity is a product that effectively produces gains for investors while minimizing risk. They truly do provide a middle ground where performance meets safety and investors can experience the best of both worlds.
Fixed index annuities are a very attractive annuity for many investors because the principal investment is protected and guaranteed from loss*, while the potential for gains allows for some market participation without downside risk of loss. But pay attention to the details! Each indexed annuity offers different components and characteristics. Insurance companies vary.