What Protection Benefits are Offered by Fixed Index Annuity?

Fixed index annuity allows you to build, protect, and grow your wealth risk free. The most important benefit of fixed index annuity includes protection of your hard-earned retirement assets and income. This is achieved by transferring the risk to the insurance company that issues such annuities. In exchange for an additional cost that varies by product and company, fixed index annuities offer maximum protection of your assets, your retirement income, and you financial future.

Protection With Annuity Income Riders

Fixed income annuities allow you to convert the annuity amount into a series of fixed payments. Some FIAs even go beyond this and offer the benefit of optional income riders with payments that increases throughout your retirement. You can start withdrawing the annuity amount after reaching a certain age as specified in the annuity contract, usually 60. The longer you put off withdrawing the annuity amount, the larger will be your income payment.

Note: Please note that any withdrawals prior to the age 59½ may be subject to regular income tax along with a 10% federal tax penalty.

Contact us if you need to know more about restrictions and costs related to fixed index annuities.

Protection of Future Income Payments

With fixed index annuity, you have total control over your future income based on the type of fixed index annuity you choose and the amount invested in the annuity. After the deferral period of the contract has expired, you will receive your contract’s value in the form of a stream of income that usually last your lifetime. The greater the deferral period, the higher the net returns of the annuity contract.

You have two choices to receive income after the end of the deferral period

• annuitization payments,
• income withdrawals

Each of the above two payments are taxed in differently. For annuities that are not held in IRA or 401(k) plan, part of the payment is taxable and part is tax free. The taxable part is for the income you earned on the annuity, while the payments made for the annuity are not taxed. Income withdrawals on the other hand, are taxable until the income you earn has been taxed after which the withdrawals become tax free.

Contact us if you need to know more about the difference between annuitization payments and income withdrawals and the income payment type that may be best for you in your own particular tax situation.

Protection of Your Retirement Savings

One of the most important considerations when purchasing an annuity is the financial strength and stability of the company who provides guarantee of the returns. Fixed indexed annuities are solely guaranteed by insurance companies that issues them. Insurance companies with a track record of stable and reliable, long-term performance guaranteed protection of your precious retirement savings.
That is why you should always ask ratings and independent agencies opinions about the insurance company’s financial strength and its ability to meet insurance contract obligations. You should also determine the insurance company’s ability to successfully hedge against extreme market events. Finally, you should find out about the management’s philosophy about long-term, stable growth of the company.

Protection of Your Family’s Financial Future

In the circumstance of you passing away before receiving the fixed index annuity payouts, your family will receive the death benefit thereby securing their financial future. With some fixed index annuities, your family will receive the death benefit even if you pass away after you have begun to receive the annuity payouts.

The death benefit is sometimes the main reason for individuals to purchase the annuities. Your family may choose to receive the annuity payments either in the form of a single payment or in installments.

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