Buyer Beware the Annuity Oversell: Find the Fixed Indexed Product That Works for You

MEDFORD, Ore., Feb. 25, 2013 /PRNewswire/ — Consumer interest in fixed index annuities has surged in the past few years, driven by the desire to avoid a volatile market plus the attraction of tax-deferred advantages and lifetime income. As a result, buyers have an abundance of FIA products with a potentially bewildering range of features to consider.

“Consumers should not look for a fixed indexed annuity that ‘does everything.’ What they’re likely to find is an annuity that does a mediocre job at everything,” stated AnnuityAdvantage.com (http://www.annuityadvantage.com) founder and CEO Ken Nuss. “It’s essential to determine what your primary goals are with regard to your annuity funds and purchase an FIA product with the most appropriate features.” He advises that, as a first step to navigating their options, consumers bear in mind that FIA product design generally falls into two major categories.

The first category covers products that are primarily focused on generating desirable levels of guaranteed future retirement income, and are less concerned with the policy’s account value accumulation. An FIA with a guaranteed lifetime withdrawal benefit (GLWB) may appeal to baby boomers who want a supplemental source of income in order to ensure that they do not outlive their retirement savings. While GLWBs have increased in complexity as well as prominence, the separate income account value and withdrawal benefit provided by the GLWB rider is guaranteed to grow at an attractive rate until the policyholder begins to withdraw funds.

The second category involves products that offer a more lucrative alternative to traditional fixed annuities and are designed to emphasize the policy’s account value accumulation, rather than income guarantees. Returns are indexed to the market and the annuity includes downside protection for the annuity holder’s nest egg. Since annuity owners have a chance to earn larger accumulation value returns with this type of product design, the GLWB rider is either omitted or is more modest than in the first category. This category would attract investors interested in accumulation and having more access to their money.

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“If your primary goal is to obtain guaranteed future retirement income, you may opt to purchase an entirely different annuity than you would for upside account value potential and accumulation,” said Nuss. His company website provides articles, financial calculators and other resources to help consumers determine what product would best suit them. Website visitors can also contact AnnuityAdvantage.com’s licensed specialists for advice. “We can help consumers sort through the maze of fixed indexed annuities, learn and understand their goals and make appropriate recommendations,” Nuss remarked.

In addition, AnnuityAdvantage.com offers fixed indexed annuities that feature a “stacked benefit,” providing a 4-5.00% guaranteed roll-up rate plus any earned index credit that is added together (stacked) and applied to the income account value. These products include zero risk to investors’ principal and complete downside protection.
Consumers can find out more about FIA products at http://www.annuityadvantage.com

 

 

 

 

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