Fixed Indexed Annuities – Changing Terms Limited Returns

Annuity providers such as Allianz, North American, Jackson Annuities, Prudential Insurance,  and others that market fixed indexed annuities, have the right to change the terms of the contract, even after the contract is purchased.

Fixed indexed annuities may limit the amount of money the investor can make, i.e. the provide a floor or cap which may affect the overall return.  A performance floor provides a minimum level of return that you can earn.   A performance “cap” sets a maximum return, usually either monthly or annually.  Participation rates are another type of cap – they determine the share of the market’s return you can get.

Several years ago, the caps on fixed indexed annuities weren’t too bad and they could legitimately be considered stock market alternative for the conservative investor due to lack of principal fluctuation.  But over the last couple of years, caps have come down so low that at best (in my opinion) fixed indexed annuities are now  bond market competitors, not stock market substitutes.

Please call me for a free consultation to review any annuities you may own or interested in purchasing.  James Morgan, CFP, JD., 303-458-9500

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