News Articles

  • Reaching Retirement Goals

    Posted on March 6, 2012 by IALC

    Indexed annuities have helped Frank and his wife Mary Lou achieve their targets for retirement. They have always been diligent about saving money, and wanted the peace of mind and safety indexed annuities provide. Because of their stable funds, Frank and Mary Lou have been able to travel, provide funding for their grandchildren’s education and donate to causes they are passionate about.

    Frank explains that if he had left a large portion of money in the stock market, he would likely have to be working part-time to support he and his wife to make up for what he would have lost. Hear more of Frank’s story below:

     
  • Fixed Index Annuities (FIA) – What, When, and Why?

    By: Tom Morrow

    Fixed Index Annuities were introduced to provide the same principal protection from market losses enjoyed by all fixed annuity owners. But, here is the kicker...FIAs also gave the annuity owner the potential for higher interest based on the market index used.

    The FIA era began in 1995 when a 60 year old from Massachusetts made a $21,000 premium in a Keyport KeyIndex annuity that grew to $51,779. Not a bad start for FIAs, and did I say something about "Principal Protection."

    The beauty of an annuity is SAFETY. You are guaranteed not to lose your principal, or any interest credited to your account. Like a Fixed Annuity, FIAs also guaranteed a minimum rate of interest. Is it any wonder why, FIAs have grown from just over $100 million the first year to (are you ready)...$210 BILLION at the end of 2010. There was something more than SAFETY going on here!

    Read more... Fixed Index Annuities (FIA) – What, When, and Why?  
  • NAFA

    National Association for Fixed Annuities

    Article By: Kim O'Brien, Executive Director, NAFA

    The investment community has historically used fixed annuities as a stable value component of an integrated investment strategy. Now, two recent innovations within the fixed annuity insurance industry are expanding the role of these products. These innovations provide new opportunities for financial advisors to diversify risk and complement the investment side of an individual's retirement plan with guarantees and insurance.

    Read more... National Association for Fixed Annuities  
  • Fixed Annuities:

    The Missing Piece of Your Retirement Planning Puzzle?

    By Doug Lockwood

    U.S. News MONEY

    Increasingly, the responsibility for funding a comfortable retirement is shifting from the employer and the government to the individual. Many people contribute to employer-sponsored retirement plans and IRAs, but there is another tax-advantaged retirement vehicle that shouldn't be overlooked: annuities.

    Read more... U.S. News & World Report Money  

Fixed Index Annuities (FIA) – What, When, and Why?

Fixed Index Annuities (FIA) – What, When, and Why?

By: Tom Morrow

Fixed Index Annuities were introduced to provide the same principal protection from market losses enjoyed by all fixed annuity owners. But, here is the kicker...FIAs also gave the annuity owner the potential for higher interest based on the market index used.

The FIA era began in 1995 when a 60 year old from Massachusetts made a $21,000 premium in a Keyport KeyIndex annuity that grew to $51,779. Not a bad start for FIAs, and did I say something about "Principal Protection."

The beauty of an annuity is SAFETY. You are guaranteed not to lose your principal, or any interest credited to your account. Like a Fixed Annuity, FIAs also guaranteed a minimum rate of interest. Is it any wonder why, FIAs have grown from just over $100 million the first year to (are you ready)...$210 BILLION at the end of 2010. There was something more than SAFETY going on here!

An FIA follows the trends of a market index, like the S&P 500. Your money is not invested in the index, it just follows the index. Here is what's going on – You RETAIN YOUR GAINS. I wont get into the details, but simply put, your account is credited with interest from the gains, and if there are no gains, then zero percent of interest is credited. Your account retains the previous gains, and waits for the next up tick of the index for more gains. It resets at the low point, and starts all over at that point. That's HUGE!

Nobody lets the Bears out on annuities. The diversification pixie dust (Read Dave Vick's book Bat-Socks & Vegas) that Wall Street has sprinkled over your mutual funds, and equity accounts has time and time again found itself not immune to Bear markets. Millions of baby boomers who are now reaching retirement age in record numbers have seen the market give and the market taketh away from their 401ks. When the bears come out of hibernation, they just eat the legs right off of your retirement savings. This is more than enough to keep anyone from sleeping at night. Bear markets just don't go away overnight. They can and have lasted for years.

Insurance companies are great at taking risks away from consumers, and putting it on themselves. Everyone understands life insurance. The insurance company knows approximately how long you are going to live according to actuarial tables, and price life insurance products accordingly based on your age, and other criteria. The insurance company always comes out ahead because they pool these risks with millions of policies. Some people die early, and others outlive the projections.

I would have liked to have been at the life insurance company meeting when it was decided that they could also take the risks of Mr. and Mrs. Consumer living to long. That has to be one of the best brainstorming meetings of all times. Someone was really thinking outside the box, and the rest is history.

Last year, there were over 131,000 people in the United States that lived to be 100 or older. That figure is growing every year. Annuites, fixed or FIAs, can give a baby boomer an income for life, that they can't outlive. With all of the concerns over Social Security, current inflation, and low interest rates, that is a benefit worth considering.

Speaking of low interest rates, find yourself a good savings calculator, and get a feel for the power of 2%. CDs are presently paying less than 1% interest. Fixed annuity products are paying 2 to 3 times these current CD rates, and FIAs have the potential of much more. The power of just a 2% difference compounded in a tax-derred account is eye opening at the least.

There is always a debate on how much of your retirement savings should be in annuities. Some financial planners like to use the Rule of 100. Simply take your age and subtract it from 100, and that is the amount of money you should keep in the market. The balance should be placed in principal protected products of which an annuity is one of the choices.

There are also test you can take to determine where you fall on the risks tolerance scale. Google Dave Vick, and purchase his book, Bat-Socks & Vegas. It is even available in a downloadable pdf format if you don't want to wait and pay more for the hard copy. I promise, you will enjoy this book, and the risks tolerance test is included.

I hope this post has thrown some light on the What, When, and Why of Fixed Index Anuities. If you are a baby boomer, the time for taking market risks should be over.

 

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