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Why annuities?

Coliseum

Annuities have been around for centuries, actually since the Roman Empire. They have been used as a savings vehicle, and primarily as a way to provide a lifetime guaranteed income. About 20 years ago the first indexed annuities came on the market and they have become, by far, the most popular form of annuity. The primary attraction is the potential for a higher rate of return than the traditional fixed annuity.

The graph below shows the difference between three different investments. The stock market, an indexed annuity, and a Bank Certificate of Deposit As you can see from the graph, the green line, which is the indexed annuity has performed extremely well. The fact that the indexed annuity has never had a negative year, but has been able to participate in a portion of the market gains, has made it, over the long term, an attractive investment option.

Portfolio
Click HERE for a larger version of this graph.

Clearly, the most attractive benefits of indexed annuities is that there is no loss of principal because of stock market declines.

Clyde Cleveland, CEO and Karey Rebello, CPA, CFP and IWG CFO discuss the advantages of indexed annuities

Assets

Indexed annuities offer a low, guaranteed, interest rate plus the potential for additional interest credits based on a percentage of the gains of a specified stock market index – the S&P 500® or other, sometimes less traditional, indexes. No matter how much the stock market declines, the annuity owner’s accounts are not affected, because annuity premiums do not directly participate in the stock market by purchasing individual stocks or mutual funds.

This protection from downside losses is a primary feature distinguishing indexed annuities from variable annuities. In variable annuities, your funds purchase investments in “sub-accounts.” For this reason, a variable annuity has the opportunity to increase in value when the market rises, but can also decrease in value in a declining market.

There is a huge amount of information about annuities on the internet and general media, both pro and con. In our experience the negative information about annuities stems from one major factor, inexperienced insurace agents providing an annuity to a client that does not perfectly match the client’s needs.

There are many different kinds of anuities and a very wide variety of riders available and if the agent has not properly determined the precise needs and desires of the client it can lead to the client purchasing an annuity that does not provide what the client truly requires. Our staff of experienced agents has had many decades of combined experience making sure that our clients receive the proper annuity based on their needs and desires.

Click HERE for a Q & A about annuities.

Click HERE for additional, more detailed, information about annuities.

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Offices in Fort Lauderdale, FL • Naples, FL • Dallas, TX

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