Some common fixed index annuity myths that we frequently hear from our clients clarified.
Fixed Index Annuities are complicated or I don't understand the benefit?
Annuities offer a guaranteed lifetime withdrawal benefit providing you a stream of income during your retirement years. If you work in the private sector and will not be receiving a government pension an annuity can provide an additional stream of income in addition to social security.
Fixed Index Annuities are tied to the stock market so my annuity could lose value?
With fixed index annuities your annuity funds are not invested directly into the equity markets. Linking to an index provides the potential to earn market returns on your annuity if the market index increases. Fixed indexed annuities have downside protection so your annuity will never lose value if the market index returns a negative value in a given year.
If I die before annuitizing what happens to my fixed index annuity? Does the insurance company get to keep the annuity value?
Fixed index annuities that haven't been annuitized, the remaining account value is passed on to your beneficiaries named by you in the annuity policy.
While there are a lot of myths floating around about fixed index annuities they are a powerful financial product for most individuals that are not entitled to a pension at retirement. Most fixed index annuities have a floor and cap rate for annuity earnings and actually represent less volatility than investing the funds directly into the equity markets.
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