Fixed Indexed Annuities and Hybrid Annuities and Income Riders, Oh My!
Categories: Annuity Education, Income Riders, Indexed Annuities
A fixed indexed annuity is a type of deferred annuity that credits interest based on the performance of a stock market index, such as the S&P 500. The policyholder’s funds are not actually invested in the stock market, but rather, the performance of the market index the annuity is tied to functions as one of the primary factors in determining how much interest will be credited to the annuity contract each year.
The policyholder receives a percentage of the gains, in the form of an interest credit, with none of the downside risk. The original principal deposit and all previously credited interest earnings are locked in and guaranteed against loss.
For a brief tutorial on Fixed Indexed Annuities, please watch this short video:
Learn more about indexed annuities, their unique features and benefits, as well as a description of various interest crediting methodologies, by visiting our Fixed Indexed Annuities page.
In addition to the robust features and benefits offered by fixed indexed annuities, many of these products also offer optional income riders that can grow your income account value at an above average annual roll-up rate.
An income rider works by giving policyholders the option of turning their income account value into a guaranteed lifetime income stream that cannot be outlived. This is an excellent option for clients seeking to develop a secure retirement strategy, because a guaranteed income rider means investors may make withdrawals for their lifetime, while still preserving access to the portion of their principal balance that has not yet been withdrawn. If unsatisfied for any reason, policyholders have the option to stop making withdrawals and still access any remaining balance in their contracts.
A fixed indexed annuity with the addition of an optional income rider attachment is sometimes referred to as a hybrid annuity. Please visit our Hybrid Annuities page for additional information and details regarding this type of annuity product configuration.
Here at AnnuityAdvantage, we strive to help our clients make smart retirement strategy decisions that are appropriate for their individual needs. To receive more information about any of our fixed indexed annuities and their income rider options, please feel free to give us a call.