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Fixed Indexed Annuities – What are They?

Every time the market drops, the fixed indexed annuity salesman come out of the wood work to sell their products.    There are many reputable firms like Allianz, North American, Pacific Life, and others offer competitive products.  While suitable for some, these products are often sold improperly to many.

What is a fixed indexed annuity?  It is a type of Annuity where the principal may grow at some annual guaranteed rate or the return of a specified market index (such as the S&P 500), but reduced by annuity company expenses and other formulas.  Usually the guaranteed rate is not much better than 2 or a few percent annual return.   And the ones marked against a specified market index may have substantial growth restrictions.   If tied to the S&P 500 index, for example, you often don’t receive the S&P 500 return, but the return minus some amount so you will earn less.

As a fee only advisor, I do not recommend these products to earn a commission.

Is a fixed indexed annuity for you?   Call me today for a free, no obligation review of any annuity you may be considering purchasing.

James H. Morgan, J.D., LL.M. (Tax), CFP®, 303-457-9500.

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