Income Planning & Annuities

Introduction to Annuities

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There are good annuities and there are bad annuities. They continue to change through the years, however much of what you have heard was probably true at some point for some annuity.

People who benefit most from annuities are those well suited for them.  To assess suitability, you really must speak to a specialist.  We will work with your broker to create a secure retirement plan.

Be certain to consider the source when doing research.  You will notice articles written by money managers tend to avoid them.  Negative aspects of annuities are often in focused.  Ultimately, there are many reasons why brokers don’t like them.

The best way to discover if an annuity is right for you is to speak with a specialist. 

 

What Is An Annuity?

Insurance companies offer annuities as an investment product. It is a contract, thus you are not a stockholder.  The company provides a return according to the contract.  Thus, the beauty of these instruments is you know what to expect.  In addition, annuities can provide market returns without the market risk.  Another important aspect is their tax advantages and creditor protection

Some annuities can provide lifetime income for you and your spouse.  They can also provide long term care coverage and death benefits. 

We offer annuities that do not have fees and can’t loose money.  Also, you will never pay us a dime.

What Are The Different Types Of Annuities?

This is the simplest type of annuity.  Your money earns a “fixed” rate.  Hence, they are similar to a bank CD.  If you need your money early, there may be a SMALL penalty like CDs.  However from day one, all annuities allow 10% withdrawal without penalty!  Additionally, they offer tax advantages and protection from creditors – bank CDs don’t. 

As you will read, there are other options that provide benefits beyond the guaranteed return of a fixed annuity.  Thus, we don’t often recommend them to our clients

The lottery is the best example of an immediate annuity.  First, the lottery will send an amount LESS than the jackpot to the insurance company.  After that, the company sends payments to the winner equal to the jackpot over many years.  Interestingly, many retirement pensions utilize immediate annuities.

There are situations where these are suitable, however we don’t come across them too often. The ability to grow is one benefit immediate annuities lack.  This is because it starts paying “immediately”

Variable annuities were designed to capture the tax and asset protection benefits of an annuity, as well as the upside of the stock market.  However, often policyholders find out they underperformed the market largely due to fees.  Further, what’s more frustrating is often these fees are not on statements, so most owners aren’t aware of the true cost of a variable

You can loose money with a variable annuity.  Thus, it is more likely you will have to trigger the “guarantee” aspect of the contract, if you have one.  In this case, nothing may be left for your family.  In conclusion, there are less risky and less expensive ways to expose your assets to grow

A fixed-indexed annuity (FIA) is one where you are credited annually based on the gain of an index.  In addition, you cannot loose money.  Furthermore, once a gain is credited, you cannot loose it either.  When you purchase an FIA, you allocate your funds in indexes offered by the company.  Each year, you are credited with the gain if there is one.  Otherwise, your account will remain unchanged.  Interestingly, this is called “ratcheting” and it is what makes FIAs unique.

In conclusion, FIAs can capture market gains without any market risk.  Additionally, there are no fees associated with most FIAs.  You can also attach disability and guaranteed lifetime income riders. 

No Two Annuities Are Alike

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