Facts About Fixed Index Annuities
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This document discusses fixed index annuities as a retirement planning strategy. It notes that fixed index annuities offer guarantees of principal, tax deferral, flexibility, access to funds, and a lifetime income stream. They allow interest to be credited based on the growth of a chosen market index while protecting the principal. Fixed index annuities also guarantee income for life and can help address concerns about outliving one's savings.
![Fixed Index Annuities
• Vehicle for accumulating money on
a tax-deferred basis
– No income taxes until funds are withdrawn
– Pay taxes only on the credited interest
– May be a federal tax penalty if you’re under
age 59 ½
Early withdrawals may be subject to a surrender charge and, if taken prior to age 59 ½, are subject to a 10% federal tax penalty.
Please note that [Agent name/Company name] and their representatives do not give legal or tax advice.
You are encouraged to consult your tax advisor or attorney](https://image.slidesharecdn.com/factsaboutfixedindexanmnities-1337779731135-phpapp02-120523082955-phpapp02/85/Facts-About-Fixed-Index-Annuities-13-320.jpg)
Facts About Fixed Index Annuities
- 1. Facts About Fixed Index Annuities Guarantees & Tax Deferral for Your Retirement Planning Strategies 11160-10 5189-09 March 2009 23457-12
- 2. Retirement Planning Strategies • The good news is that we’re living longer • The challenge we face is not outliving our income PURCHASE OF AN ANNUITY IS AN IMPORTANT FINANCIAL DECISION. YOU SHOULD HAVE A FULL DISCUSSION WITH YOUR INSURANCE AGENT BEFORE MAKING ANY DECISION.
- 3. Common Issues Consumers are Facing Today • Underestimating how much income they’ll need after they retire • Underestimating how long they’ll live • Overestimating how much they can withdraw from their portfolio without depleting it
- 4. Common Priorities of Those In or Nearing Retirement 1. Maintain financial independence 2. Avoid depending on family members for your care 3. Protect your assets and have an estate for your heirs 4. Alleviate concerns of becoming a financial burden to your loved ones 5. Preserve your wealth created over a lifetime 6. Maximize the likelihood that you have access to quality care 7. Avoid leaving a legacy of debt to your spouse
- 5. Financial Concerns • Income to maintain a reasonable standard of living • Principal protection • Outliving income
- 6. Financial Solutions • How can these questions be dealt with? • What can you do to address these concerns? • Is there a real solution?
- 7. Exploring the Benefits • Each solution offers it’s own benefits. Some of the solutions, such as fixed index annuities, include features to help hedge against inflation through tax deferral, some measure of liquidity or provide relatively more certainty in a fixed rate of return.
- 8. A Fixed Index Annuity May Be The Solution • Offers – Guarantee of principal – Tax deferral – Flexibility – Access to your money – Lifetime income stream Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Early withdrawals may result in loss of principal and credited interest due to surrender charges.
- 9. Fixed Index Annuities • Offers interest rate guarantees – Potential to receive credited interest based on the growth of the client’s chosen external market index – Protection of your principal Substantial federal tax penalties and surrender charges may apply to early withdrawals. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
- 10. Fixed Index Annuities • Principal is guaranteed* • Supported by claims-paying ability of the issuing insurance company • The knowledge that your money will be there when you may need it most - in retirement *Early withdrawals may result in loss of principal and credited interest due to surrender charges.
- 11. Fixed Index Annuities • Monthly income never reduced • Insurance company assumes the risk • Stream of income you cannot outlive Guarantees are backed by the claims-paying ability of the issuing insurance company.
- 12. Here’s an Example of Annual Reset Initial Principal 0 Year 1 Year 2 Year 3 Year 4 Year 5 Any contract anniversary index gains are locked in every year, never any losses. Even though index results may be negative, they do not adversely affect the annuity value. Your credited interest is locked in, even if the market drops. Hypothetical example provided for illustrative purposes only, using one type of interest calculation method. It is not intended to represent the results of any specific product. No single crediting method consistently delivers the most interest under all market conditions.
- 13. Fixed Index Annuities • Vehicle for accumulating money on a tax-deferred basis – No income taxes until funds are withdrawn – Pay taxes only on the credited interest – May be a federal tax penalty if you’re under age 59 ½ Early withdrawals may be subject to a surrender charge and, if taken prior to age 59 ½, are subject to a 10% federal tax penalty. Please note that [Agent name/Company name] and their representatives do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney
- 14. Fixed Index Annuities • Offers options and access to your money – Income – Minimum distribution payments – Lump sum payments • May incur surrender charge or penalty – Credited Interest only withdrawals – Penalty-Free annual withdrawals Terms and conditions may vary. See the terms and conditions for each product. Any distributions are subject to ordinary income tax and, if taken prior to age 59 1/2, a 10% federal tax penalty.
- 15. Fixed Index Annuities • Life income option – Retirement income – What if you live for 15 or 20 years? – A fixed index annuity is designed to help address this concern – Income guaranteed for life – Only a fixed annuity or a fixed index annuity offers this guarantee Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
- 16. Summary • Fixed Index Annuities offer: – Guarantee of principal – Income you cannot outlive – Tax deferral Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
- 17. Is a Fixed Index Annuity Right for You? • How long can I leave my money in the annuity? • What do I expect to use the money for in the future? • Is a guaranteed interest rate more important to me, with less risk of losing the principal? • Or, am I somewhere in between these two extremes and willing to take some risks?