Annuity Guys®

Annuity Rates, Features & Ratings: America's trusted annuity resource. Compare best options for hybrid, index, fixed, variable & immediate annuity quotes.


Helping You Create Great Results Your Retirement Deserves!



(217)753-1515
  • Home
  • About Us
    • About Us
    • Contact Us
    • Site Terms & Disclosure
    • Privacy Policy
  • FAQs
    • Most Frequently Asked Annuity Questions
  • All Annuity Guys Videos
  • Annuity Types
    • Best Annuity Reviews
    • Market Free™ Annuities
    • Choosing an Annuity
    • Deferred Annuities
    • Hybrid Annuity Choices
      • Hybrid Annuity Pros&Cons
      • Hybrid Income Riders
      • Hybrid Annuity Guarantees & Strategies
    • Fixed Annuity Choices
      • Fixed Annuity Performance
      • Better Fixed Annuities
      • Fixed Deferred Annuities
      • Fixed Rate Annuities
      • Fixed Annuity Alternatives
      • Fixed Annuity Pros & Cons
      • Fixed Annuity Negatives
    • Index Annuity Choices
      • Fixed Index Annuity Features
      • Fixed Index Annuity Performance
      • Better Fixed Index Annuities
      • Fixed Index Annuity Alternatives
      • Fixed Index Annuity Pros & Cons
      • Fixed Index Annuity History
      • Fixed Index Annuity Negatives
    • Immediate Annuities
      • Immediate Variable Annuity
      • Immediate Fixed Annuities
    • Variable Annuities
      • Variable Annuity Features
      • Better Variable Annuities
      • Variable Annuities Disadvantages
      • Variable Annuity Alternatives
      • Variable Annuity Negatives
      • Variable Annuity Performance
    • Pre-Issued Annuities™
      • Hybrid Annuities versus Pre-Issued Annuities ™
    • Annuity Glossary
  • Articles
    • How Do MarketFree™ Annuities Work?
    • Are Annuities Safe?
    • Living Benefits
    • FIA Performance
    • Beware of FIAs?
    • Annuities & Retirement
    • Annuities & Estate Tax
    • Rollovers & Annuities
    • Annuities & Tax
    • Charity & Annuities
    • The Lost Decade
    • Best Annuity Videos
    • Social Security Benefits
  • Calculators
    • Retirement Planning Calculator — Basic
    • Retirement Shortfall Calculator — Basic
    • Immediate Annuity Calculator & Quotes
    • Fixed Index Annuity Calculator & Fixed Annuity Calculator
    • Variable Annuity Calculator & Hybrid Annuity Calculator
  • Blog
    • Annuity Guys® Weekly Annuity Video Blogs
  • Get Annuity Guys Help
    • Request Annuity Guys’ Planning Help Today
You are here: Home / Archives for Volatility Index

Can a Hybrid Annuity Uncapped Index Pay Higher Interest?

September 27, 2014 By Annuity Guys®

Should annuity buyers be giddy because they can own an annuity with no limiting upside cap and of market loss? Well, maybe, since we are now in the new annuity era of the low volatility index.

If you are a prospective annuity buyer you should consider this new strategy for good reason. First and foremost, these are uncapped indexes with seemingly unlimited upside potential; however, before any irrational exuberance kicks in… [continued below video]

Video: Annuity Guys Dick and Eric discuss the pros and cons of the new low volatility indexes.

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. 

and you sign the next annuity contract you see, please understand that each of these volatility control indexes does have some limiting factors. One such limiting factor used to increase upside potential is the result of a mathematical formula that works similar to a tactically managed investment account that moves in and out of market allocations based upon predetermined triggers. For example: in times of higher volatility these indexes will often move more toward a safe money strategy of weighting more of the index in a cash or bond position. Conversely, when the volatility is low the index will be weighted more toward the equities side.

Another limiting factor of these uncapped indexes is the ability for the insurance company to apply a standard fee or a spread charge. The spread charge/fee is the most common cost associated with these uncapped indexes. It allows the insurance company to take the first few percentage points of growth (typically 2-4%) and then credit your account with everything above that amount. For example: if the spread is 2.0% and the index gains 8.0%, your account will be credited 6.0%. What makes these spread fees more attractive than other charges? If the index has a down or negative year, there is no charge or cost to your account. Just to be clear, with all fixed index annuities your principal is protected and if the index finishes negative, your account will be credited at 0% – it will never reduce your account balance.

Not all of these uncapped indexes were created the same – some are easier to track and have ticker symbols and locations you can find online. Others appear to have been created just for the insurance company and the only research available on them is available through the insurance companies brochures.

Perhaps the biggest warning we can share with these uncapped volatility indexes is the need for realistic expectations. We have seen the historical numbers showing annual gains of 15-20% and they look wonderful, but don’t be wowed by the outlying numbers. Realize that these indexes were designed to provide modest gains that should allow you to share in a portion of the success of the index in the good years while protecting you from losses in the bad years. If you enter an annuity contract expecting stock market type returns, you will likely be disappointed.

This strategy is the current “rage” in the industry. It seems like every insurance company has released a new annuity or a new indexing strategy which utilizes an uncapped low volatility index. So you need to understand how these newer indexes work and if this strategy fits your risk profile.

As annuity guys, we appreciate this innovation and this strategy because it is easier for most clients to understand and grasp than explaining participation rates and index cap limits.

 

Five Retirement & Annuity Calculators

Best Advanced Retirement Income Calculator - Free
  • Advanced Retirement Annuity Income Calculator
  • Advanced Financial Planning
    Retirement Income Calculator
    Save Reports & Planning Docs!
  • This powerful calculator doesn't guarantee accuracy or any future results. You should use a licensed financial planner to confirm all of your calculations.
    Instant Access - Confidential - Easy Opt-Out
  • This field is for validation purposes and should be left unchanged.


 

Filed Under: Annuity Commentary, Annuity Guys Blog, Annuity Guys Video, Annuity Income, Annuity Safety, Hybrid Annuities, Market Safe Annuities, Retirement Tagged With: annuities, Annuity, Annuity Buyer, Annuity Contract, Annuity Guys, Hybrid Annuity, Indexed Annuity, Insurance, Life Annuity, retirement, Retirement Annuity, Volatility, Volatility Index


  • Are Annuities a Tax Trap?

    Are Annuities a Tax Trap?

    Never buy an annuity – it is a tax trap or so the negative articles say! When I hear the words …Read More »
  • Five Annuity Obstacles to Overcome

    Five Annuity Obstacles to Overcome

    Purchasing an annuity for retirement can be a difficult and stressful decision. For many people this means re-positioning a portion of their retirement assets as …Read More »
  • Is One Million in Annuities or Securities Enough to Retire On?

    Is One Million in Annuities or Securities Enough to Retire On?

    If I had a million dollars, I’d be rich… but, would I be rich enough to retire for 30 plus …Read More »

Revealing Fun Video: Fiduciary Advisors Vs. Annuity Salesmen
MUST KNOW FACTS 90% of
ANNUITY ADVISORS AVOID TELLING!
  • *FIDUCIARY RETIREMENT REVIEWS
    Second Opinions Improve Retirements
     
    "For Your Retirement's Success"
     Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Material Fact 1:
      About 90% of advisors ARE NOT REQUIRED by law to do what is best for their clients!
     
    Material Fact 2:
     Fiduciary Advisors ARE REQUIRED by law to do what's best for their clients! 
     
      Hence, clients of a fiduciary can know that their advisor chose the highest legal standard required by law to work strictly for their highest good.
     
     We estimate Fiduciaries are less than 10% of total U.S. financial service providers. Fiduciaries are held to the highest client legal standard of financial planning and investment advice.
     
     The other 90% are sales oriented advisors, brokers, bank reps, registered reps. & insurance agents, selling products on a much lower suitability legal standard, not necessarily what's best for their client!
     
       Fiduciaries also must disclose conflicts of interest that could potentially bias their advice, such as; selling products that pay them higher commissions having higher fees or costs, and their lack of investment product access limiting their client's opportunities, to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"


  • When is Zero Good News for Hybrid Annuities?

    When is Zero Good News for Hybrid Annuities?

    Have you called someone a “good-for-nothing” and thought you were being derogatory?With hybrid annuities, being good for nothing in the bad …Read More »
  • Lifetime Annuity Income: Annuitize or Control Your Money with Income Riders

    Lifetime Annuity Income: Annuitize or Control Your Money with Income Riders

    Do you have to annuitize an annuity to get **guaranteed lifetime income? No, not if the annuity has an income rider.If …Read More »
  • Are You Too Young or Old to Purchase an Annuity?

    Are You Too Young or Old to Purchase an Annuity?

    What is the best age to purchase an annuity?There have been a plethora of articles and reports about unscrupulous agents …Read More »
  • Long Term Care – Annuity and Life Insurance Solutions

    Long Term Care – Annuity and Life Insurance Solutions

    Long-term care, growth, and wealth transfer are built into many of today’s annuities and life insurance products, this is sometimes achieved …Read More »
  • Low Interest Rates Hurt Seniors

    Low Interest Rates Hurt Seniors

    The Federal Reserve Board has not formally relaxed its intention to keep interest rates low through the end of 2014. …Read More »
  • Why are Annuities an Excellent Alternative Asset Class?

    Why are Annuities an Excellent Alternative Asset Class?

    What goes up but does not come down? No, this is not the start of some riddle to be answered …Read More »
  • Are Hybrid Annuities too Complicated?

    Are Hybrid Annuities too Complicated?

    In our conversations with people considering annuities we often hear them repeat a phrase they have read or heard from …Read More »
  • Hybrid Annuity Sales Hit All Time Highs! Do You Know Why?

    Hybrid Annuity Sales Hit All Time Highs! Do You Know Why?

    Record numbers of retirees and savers are flocking to fixed and fixed index annuities – why?For many baby boomers , the great …Read More »

View Our Newest Videos! Subscribe Now
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Can Hybrid Annuities Beat Market Returns?

    Can Hybrid Annuities Beat Market Returns?

    Do you remember the story of the tortoise and the hare? Hybrid annuities might be compared to the tortoise in …Read More »
  • Should You Buy Annuities in our Trump Influenced Bull Market?

    Should You Buy Annuities in our Trump Influenced Bull Market?

    What would Trump do? Do you think he might be the type to buy low & sell high? This sounds …Read More »
  • Lifetime Annuity Income: Annuitize or Control Your Money with Income Riders

    Lifetime Annuity Income: Annuitize or Control Your Money with Income Riders

    Do you have to annuitize an annuity to get **guaranteed lifetime income? No, not if the annuity has an income rider.If …Read More »
  • Annuity Income Riders

    Annuity Income Riders

    What makes a newer hybrid style income annuity different from the industry standard, immediate income annuity? It’s the income rider!Everyone …Read More »
  • 2017 Annuity Guys Market Prediction, NOT!

    2017 Annuity Guys Market Prediction, NOT!

    Wow, we must admit, we were DEAD WRONG!As Annuity Guys, we tend to avoid sticking our necks out on economic …Read More »
  • Annuities Make Life Better for Retirees – Study Reports

    Annuities Make Life Better for Retirees – Study Reports

    Would you rather be happy and optimistic in retirement or worried about spending too much? We know it sounds like …Read More »
  • How to Get Rid of a Bad Annuity

    How to Get Rid of a Bad Annuity

    Do you think you made a bad decision on an annuity purchase in the past? Do you think you’re stuck due …Read More »
  • Can Index Annuities be a Good Hedge Against Inflation?

    Can Index Annuities be a Good Hedge Against Inflation?

    Are our Golden Years in danger, with the new high inflation issues that may be here to stay? The years …Read More »
Get Newly Released Annuity Guys® Videos on Saturday Mornings
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Is a Pre-Issued Annuity right for you? – Part 1

    Is a Pre-Issued Annuity right for you? – Part 1

    This is a two part blog on Pre-Issued Annuities. In part 1 we will examine some of the reason why …Read More »
  • Choosing Annuity Specialists, Local or National? Which are Best?

    Choosing Annuity Specialists, Local or National? Which are Best?

    There has been a huge shift of folks leaving local brokers and advisors to find better investment options online with …Read More »
  • Are Annuity Surrender Charges a Deal Breaker?

    Are Annuity Surrender Charges a Deal Breaker?

    The last time you bought a new car, how much of a factor in your purchase decision was the vehicles …Read More »
  • Avoiding Annuity Income Rider Abuse!

    Avoiding Annuity Income Rider Abuse!

    If they tell you that your annuity has a "6%" guarantee most annuity purchasers believe that the 6% guarantee is …Read More »
  • Can Annuities Create Your Highest Retirement Income?

    Can Annuities Create Your Highest Retirement Income?

    Which of these two statements about retirement income do you find more appealing?My retirement income is contractually **guaranteed to meet …Read More »
  • Government Shutdowns Affect Annuities

    Government Shutdowns Affect Annuities

    Can you feel the impending doom of the government shutdown?Every night, it seems that the media cannot wait to tell …Read More »
  • Relying on Annuities for Retirement Pensions

    Relying on Annuities for Retirement Pensions

    The private sector has been bailing on providing pensions for employees over the last few decades. Now, it appears legislation to …Read More »
  • Enjoy Annuity Income While Maintaining Your Principal!

    Enjoy Annuity Income While Maintaining Your Principal!

    You can’t have your cake and eat it too… or can you?When it comes to choosing annuities, most folks want steady growth and …Read More »
  • Is One Million in Annuities or Securities Enough to Retire On?

    Is One Million in Annuities or Securities Enough to Retire On?

    If I had a million dollars, I’d be rich… but, would I be rich enough to retire for 30 plus …Read More »
  • Exposing an Advisor’s Annuity Bias!

    Exposing an Advisor’s Annuity Bias!

    Would you allow your general practitioner to perform heart bypass surgery on you in their office? Since, after-all, he or …Read More »

 

Empowering Annuity Reference Book

 
Start Reading Now - Instant Download
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 
Comprehensive Site Terms and Disclosure | Privacy Policy | Copyright © 2025 Annuity Guys®


  ** 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.
Annuities 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 Annuity Guys website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this educational Annuity Guys Website. He still maintains his insurance license in good standing and assists his current clients.
Annuity Guys' 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.)



  # Investors should consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options. The current prospectus and underlying prospectuses, which are contained in the same document, provide this and other important information. Please contact an Investment Professional or the issuing Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.


  ^ Investors should consider investment objectives, risk, charges, and expenses carefully before investing. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.


  ^ Eric Judy offers advisory services through Client One Securities, LLC an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC are not affiliated.