Fixed Index Annuity Archives | Annuity Guys®

Top Ten Fixed Index Annuity Questions to ask Before Purchasing!

Annuity Guys® — Tue, 08 Oct 2024 06:00:28 +0000

And now, here’s your Fixed Index Annuity TOP TEN Countdown… while we are definitely not the Casey Kasem version of counting down the top ten annuities, we can be somewhat entertaining as we help you stay informed concerning the ten top questions about fixed index annuities… [Top 10 list is continued below video]

Video: Watch as Dick and Eric tackle these 10 crucial questions one by one…

Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

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Is this a fixed index or variable annuity^#;
What are the ratings of the insurance carrier;
How long has the carrier been in business?
What are the minimum **guarantees?
What are the limiting factors for growth of the cash account?
What are the contractual **guarantees for ;
- Income
- Death Benefit
- Long Term Care
- Growth Components
What is the company’s renewal rate history.
Is the fixed index annuity more optimal for Income, Growth, Long Term Care or Death Benefit?
What is your States, Guarantee Association Limits for Fixed Annuities.
In the worst case scenario will the contractual **guarantees meet your retirement objectives.

Don’t like our list check out this one from Forbes which is more focused on variable annuities^#.

The ABCs Of Annuities: 8 Questions To Ask Before You Buy

By: Deborah L. Jacobs

Annuities have become big business. Baby boomers are retiring in record numbers. Having experienced the market turmoil and uncertainty of the past five years, many of them want investments that offer an element of stability and security.

When chosen carefully annuities can protect consumers against outliving their money and protect against stock market volatility–features which are not available in traditional stock or mutual fund^{^} accounts. But with his protection comes additional costs, restrictions and fees, which consumers must review before considering an annuity purchase.

An annuity contract is a method of converting wealth into a stream of income. An investor gives money to an insurance company. In exchange the insurance company agrees to provide the investor with a benefit at a future date. The two most common promised benefits are an immediate life-long income stream (an “immediate annuity”) and the promise of growing an account balance into the future (called a “deferred annuity”).

Immediate annuities are contracts in which the buyer pays a set premium in return for a promised annual payment to that person and perhaps the surviving spouse. The size of an annuity payment (generally expressed as a monthly payment), is based on the age of the purchaser when the annuity begins and actuarial assumptions about the individual’s life expectancy.

Deferred annuities credit accounts annually. The crediting rate is based on a fixed promise; equity and bond performance; or a combination of elements. Deferred annuity contracts do not provide an immediate income stream but instead are a long-term tax-deferred investment. Recent demand for retirement plan rollovers coupled with **guaranteed elements in deferred annuity contracts have created a surge in product sales.

As the annuity business has grown, insurance companies have begun offering a variety of contract types, features, bells and whistles. Product innovation and competition can be fantastic for consumers. Unfortunately, they have also made things so complex that it may be difficult to understand what you’re buying. Before signing on to one of these arrangements, make sure you understand which annuity contracts, if any, are right for you and what type of additional contract features may be worth added costs. Here are some questions to ask.

1. Will the insurance company selling me the annuity be able to make good on its promises? Credit ratings matter. Consumers have little other objective information to determine the likelihood they will receive their promised benefit in the future. So it makes sense to ask for the exact rating of an insurance company.

Do not be satisfied with potentially misleading phrases such as “good,” “great,” “consistent” or “strong.” Insurance companies are rated by AM Best, Fitch, and Moody’s as well as Standard and Poor’s. AM Best ranks superior companies as A++ and A+. Moody’s, Fitch and S&P rate top quality insurance companies between AAA and A. Consumers should be wary of purchasing an annuity contract sold from an insurer with less than an AM Best “A” rating, or purchasing any contract from a salesperson who is unable to provide an AM Best rating.

2. How much will this contract cost annually, including all expenses? Annuity contracts are generally more expensive than mutual fund^{^}s. The richer the **guarantees carried by a contract, the higher the corresponding costs will be. Deferred annuity contracts will generally charge:

An administrative fee (typically from 0.10 to 0.25%). This fee covers reporting, generating reports, online security and account access. Administrative fees may be waived for accounts with initial balances of more than $1 million.

Mortality and expense fees (typically ranging from 1.0% – 1.5%). These fees are used to provide insurance death benefits if the contract holder passes away and to compensate the insurance company for risks associated with holding the contract.

Mortality and expense fees will vary based on how much the insurance company has promised to pay at the death of the owner. Simple death benefit options, such as promising to return the current account balance to the contract owner at death, will have lower mortality and expense charges (0.5 – 1.0%) than those promising more sophisticated death benefits (such as a multiple of the contract premium), or elaborate calculations taking into consideration the highest contract value on specific contract anniversary dates (1.0% – 2.0%).

Fees for any additional optional benefits. These benefits, such as **guaranteed minimum returns or sustainable lifetime withdrawals, will add to the cost of a contract. While additional features vary widely by insurer, they can generally be pooled into “income” related features, “death” related features or “access” related features.

Income features **guarantee that a cash flow stream from the contract will continue uninterrupted regardless of market fluctuation. Income features vary dramatically by insurance companies but generally range in annual cost between 0.5 – 1.5%. Consumers who do not currently need withdrawals from the annuity contract should consider their options carefully before purchasing this type of benefit.

Death features are generally wrapped into the mortality and expense charges of a contract. The simplest death benefit is a return of the initial premium paid to the insurance company. More complicated features promise an elevated death benefit of some sort. Death provisions can be complicated and are often not needed by consumers using annuities as an investment and retirement tool.

Access features, such as being able to withdraw account dollars free of any early withdrawal penalty in the event of a terminal illness, disability or long-term care need, are common in today’s annuity contracts. Access features may be standard in some contracts but may carry additional cost in others.

In addition to these fees, variable contracts will also charge direct or indirect asset management fees. All totaled, a deferred variable annuity^# will typically range in cost between 1.75% annually, for a contract with few bells and whistles, to over 3.25% annually, for a contract with income and death benefit **guarantees. Understand the exact purpose of each fee and compare fees across insurance companies before you purchase a variable annuity^#. [Read More… ]

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We practice and recommend a "Holistic - OutCome Based Planning process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) that should be considered for annuities." OutCome Based Planning analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.

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This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.

When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on our commitment to serve all client's with a high standard of excellence in financial planning for retirement.

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Selecting the Best Annuity & Retirement Income Advisor

Are you willing to work with one of our retirement and annuity advisors based on their experience and expertise as a first priority rather than being limited by a local or regional area? The good news is that technology has forever eliminated our geographical limitations and leveled the playing field for everyone! As a result of today's technological advances, all of us can now work confidently with experts in any field including personal finance. We are no longer confined by regional or local boundaries limiting our choices and ultimate success. A high quality advisor is now as close as a click or phone call away.

Video:"Choose a National or Local Advisor"?

"There is no room for trial and error when it comes to choosing MarketFree® Annuities or a Successful Retirement Planner."

When you think about it, your money is almost always in some other state with a custodian; whether invested in the market or with an annuity insurance company, the advisors competence is primarily needed when positioning your money initially. So working with a specialized expert in a financial discipline like investments or retirement planning is imperative. There are no undo buttons in retirement! Once the annuities get set up correctly, it is customary and more efficient for owners to benefit by having direct access to the issuer instead of having to go through the agent. And, of course any reputable advisor, local or national, is more than willing to assist their clients if needed after they are implemented.

Video:"Why These 3 Types of Annuity Advisors are Not Created Equal"

"There are no undo buttons in retirement so it is vitally important that you do it right the first time!"

We are fortunate to have a select few who we believe are truly the highest qualified advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. Our advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best options available for your retirement planning.

Video: "How Much of Your Money Should You Consider Placing into Annuities"?

"It takes an experienced expert to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage."

"Anyone can sell you an annuity; however, it takes a truly qualified and experienced advisor to know how to structure them for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one that can accomplish all of these objectives. It is how an advisor structures multiple annuities in balancing your total portfolio that makes it possible to achieve your most important retirement objectives."

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Why Searching for the Best Annuities on Your Own Can be so Frustrating...

Almost everyone nowadays turns to the internet for answers on everything - from buying new widgets to researching just about everything under the sun; and finding the best annuity is no exception! At first, it may seem that researching will be straightforward but the more time you spend researching them, the more frustrating it can be. Why is this? First of all, it does not take long to realize that gimmicks abound - such as warnings and alerts from salesmen who just want your attention so they can sell you one or the "too good to be true" claims of 8% to 14% **guaranteed interest and of course the claim that you can get the full market upside with no downside risk! If you have done any research you have heard all of these claims in advertising which are mostly half truths and not fully explained. So how can you find the best annuities on the internet? The truth is... you can't! And what is even more frustrating is all the conflicting points of view from so called experts. There are well over 6,000 different annuities - all designed for different reasons, so is it any wonder that the deck is stacked against the average researcher or do-it-yourselfer. Add to that the fact that they pay high enough commissions to attract a plethora of both good and bad agents. This does not make annuities good or bad; they are simply a financial tool that truly benefit those who use them correctly. How can you find the best annuities for your unique situation?

Use the internet cautiously;
Work with a vetted and experienced specialist;
Do not settle for that one dubious best plan. Compare multiple Outcome Based Plans to decide on the one that is truly best for you;
Be keenly aware of scare tactics and hyperbole - avoid those advisors and websites;
Avoid websites that are focused on rushing free reports, rates and quotes to get your contact information they are rushing you to speak with them, instead, take your time and choose someone you are more comfortable with that works on your time-table;
Know the Five Vital Factors (listed above) that an experienced specialist must answer before helping you select the best options for your situation;
Watch this telling video "Avoid Annuity Gimmicks, Amateurs and Charlatans"...

Video: "Avoiding Gimmicks, Scams & Charlatans"

^** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
They are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

^*Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)

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MarketFree Annuity Definition: Any fixed annuity or portfolio of fixed annuities that protects principal / premium and growth by remaining market risk free.
Market Free (annuities, retirements and portfolios) refer to the use of fixed insurance products with minimum guarantees that have no market risk to principal and are not investments in securities.
Market Gains are a calculation used to determine interest earned as a result of an increasing market related index limited by various factors in the contract. These can vary with each annuity and issuing insurance company.
Premium is the correct term for money placed into annuities principal is used as a universal term that describes the cash value of any asset.
Interest Earned is the correct term to describe Market Free Annuity Growth; Market Gains, Returns, Growth and other generally used terms only refer to actual Interest Earned
Market Free Annuities are fixed insurance products and only require an insurance license in order to sell these products; they are not securities investments and do not require a securities license.
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Market Free Annuities may or may not have a bonus. Some bonus products have fees or lower interest crediting and when surrendered early the bonus or part of the bonus may be forfeited as part of the surrender process which is determined by each contract.
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Hybrid Annuity Sales Hit All Time Highs! Do You Know Why?

Annuity Guys® — Sat, 13 Sep 2014 06:00:51 +0000

Record numbers of retirees and savers are flocking to fixed and fixed index annuities – why?

For many baby boomers , the great recession is still ingrained into their thoughts as they make plans for their retirement. The thought of losing 30-40% or more of their portfolio in the stock market has sent them out seeking safer growth options; while other baby boomers seek the safeguard of knowing that they will have lifetime **guarantees for their foundational income in retirement.

The insurance industry is on pace to issue $100,000,000,000.00 (that’s one hundred billion dollars) in just fixed and fixed index annuities this year alone! With banks offering safe money rates that hover just over zero, we should not be surprised by the number of people flocking into contractually **guaranteed growth and income options. However, this is most likely not the only reason for this level of annuity sales growth. Annuities have traditionally paid better rates than the banks so the growth of sales should not be based upon higher interest rates alone. [continued below video…]

Video: Annuity Guys, Dick & Eric, discuss why it seems like everyone wants a “hybrid” Fixed Index Annuity!

Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

According to AARP, about 8000 people will turn 65 everyday from now until 2029. These baby boomers have seen one of the greatest bull markets of all time during the eighties and nineties followed by substantial market volatility and more recently a “lost decade” of market gains. They appear to be interested in preserving their wealth and income in retirement and many are willing to give up some of the market’s upside potential to protect against market backslides. There may not be empirical evidence to support the fact that retirees are valuing the **guarantees that annuities offer, but the dollars seem to be speaking loudly that boomers believe that annuities are a good option for retirement planning.

Is now the right time to join the crowd moving a portion of one’s savings into fixed or hybrid fixed index annuities? It depends – do you feel the need to protect retirement dollars from losses resulting from the next big correction in the equities market? Do you want a predictable, stable income stream that you cannot outlive? Do you wish you had your parents company sponsored pension plan? Does the fear of outliving or losing your money keep you up at night? If you answered yes to any of these questions, you may want to join the millions of satisfied annuity owners who value the way these financial products secure their retirement.

The inspiration for this weeks entry came from our friends at the Insured Retirement Institute.

IRI Second-Quarter 2014 Annuity Sales Report: Industry-Wide Sales at Highest Level in Three Years

Indexed Annuities Power Fixed Annuity Sales to Five-Year High; Variable Annuity Sales Up from First Quarter

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today announced final second-quarter 2014 sales results for the U.S. annuity industry, based on data reported by Beacon Research and Morningstar, Inc. Reaching the highest mark in three years, industry-wide annuity sales in the second quarter of 2014 rose to $59.9 billion, a 6.8 percent increase from $56.1 billion in the previous quarter and a 9.9 percent increase from $54.5 billion in the second quarter of 2013.

Fixed annuity sales – supported by record fixed indexed annuity sales – increased to $24.3 billion in the second quarter of 2014, according to Beacon Research. This was a 7.6 percent increase from $22.6 billion in the previous quarter and a 41.6 percent increase from $17.1 billion in the second quarter of 2013. Variable annuity total sales reached $35.6 billion in the second quarter of 2014, according to Morningstar. This was a 6.2 percent increase from $33.5 billion in the first quarter of 2014, but a 4.6 percent decline from $37.3 billion in the second quarter of 2013.

“These are the highest industry-wide sales we’ve seen in three years, and on the fixed side of the market, the highest in five years,” said Cathy Weatherford, IRI President and CEO. “We continue to see moderate growth, driven by consumer need for protection and income, in all types of retirement income products, and more robust growth in certain products based on the macroeconomic conditions of the day. For example, the market is currently experiencing a surge in the sale of fixed indexed annuities that – in addition to offering upside potential with downside protection and access to **guaranteed lifetime income – can be used by consumers as an alternative to traditional fixed income investments without the interest rate risk.”

According to Beacon Research, continued growth in fixed annuity sales were largely supported by a surge in fixed indexed annuity sales, which hit a new quarterly record of $12.9 billion in the second quarter of 2014. This represents a 14.8 percent increase from first-quarter 2014 sales of $11.2 billion and a 41.5 percent increase from second-quarter 2013 sales of $9.1 billion. Income annuity sales also rose during the second quarter of 2014, topping $3.39 billion – a 3.2 percent increase from nearly $3.29 billion in the previous quarter and a 32.7 percent jump from $2.56 billion in the second quarter of 2013. For the entire fixed annuity market, there were approximately $12.5 billion in qualified sales and $11.8 billion in non-qualified sales during the second quarter of 2014. [Read More…]