What are Benefits of Fixed Index Annuities?
Fixed Index Annuities (FIAs) provides a wealth of benefit to the investors. They offer unique set of features not offered by any other financial saving investment such as:
- Guaranteed income protection,
- Lifetime retirement income,
- Tax deferral,
- Death benefit,
- And a lot of other value added features.
No other financial instrument can come even close to matching the income earning potential of FIAs, while also providing protection of the retirement saving amount and the accumulated income.
Market Indexed Income
FIAs offer unique opportunity for investors in building their wealth. The income earned on FIAs is based on selected market index performance. When the market performs well during a period, income is credited to the account based on the extent of the change. No deductions take place from the accumulated balance in case the market declines during a specific period.
Tax Deferral
Any income that you earn from the FIA is tax deferred as per the current federal income tax laws. Taxes are applied only when you withdraw amount from the FIA account. The income that you receive at the end of the contract term is taxed at ordinary income tax. However, withdrawals before the age of 591/2 incur a 10% federal tax penalty.
Accelerated Income Accumulation
The foremost benefit of FIAs is that your savings grow at an accelerated rate, as the income is tied to the stock market performance. The rate, at which the income accumulates, is usually much higher as compared to that earned from ordinary annuity. Moreover, the tax deferral benefit also ensures speedy accumulation of income into your savings account. This will allow you to build a large nest egg that is sufficient enough to last you throughout your retirement days.
Principal Protection
FIAs provide a high level of principal protection that brings you the perfect peace of mind in knowing that your precious, hard-earned savings will remain available to you during retirement. The FIAs provide principal protection in two separate ways:
- Lifetime Retirement Income
- Death Benefit Legacy
In the unfortunate case, in which you pass away before receiving the index annuity payments, your family will receive the amount ensuring the protection of their financial future.
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