Fixed Indexed Annuities

A fixed index annuity is an insurance contract that provides buyers with income during retirement. With these annuities, your payments are calculated based on the returns of a stock market index. A fixed indexed annuity offers greater protection against losses compared to investing directly in stocks. If you want a safe investment vehicle that offers potential for returns, choose a fixed indexed annuity.

Here’s everything you should know about fixed indexed annuities.

What Are Fixed Indexed Annuities?

A fixed indexed annuity provides steady payments that are decided based on an underlying index. They offer some of the upsides of investing in index funds and they may track the S&P 500, the Nasdaq, the Russell 2000, or the Hang Seng. Fixed index annuities are generally safe from loss against the principal. This means you don’t lose any of the money you put into the account.

Although, there is a cost to this protection. With fixed indexed annuities you won’t receive the exact return of the underlying market index. This limits both your potential gains and your losses. If you prefer a relatively safe mode of investment, fixed indexed annuities may make sense for you.

How To Set Up A Fixed Indexed Annuity

The first step towards setting up a fixed indexed annuity is purchasing an annuity contract. This can be done using a lump sum deposit or you can make payments over time. Some people even transfer over funds from their retirement plan to fund their annuity. After you’ve opened your annuity account, you tell your insurance company how to invest the money. You have several options here. You can either put all of your money in a single index or divide it across several different ones. The amount of returns you receive is based on how well each index performs.

Withdrawing From Your Fixed Indexed Annuity

Once you’re ready to start taking money out of your fixed indexed annuity, you can convert your balance into a stream of future income. These payments can be set to last for a fixed period of time, like 30 years, or for the rest of your life. The amount of money you receive from your withdrawals depends on your account balance, investment returns, and how long you decide to have payments last. Longer payment periods result in smaller monthly payments.

Invest In A Fixed indexed Annuity

A fixed indexed annuity limits your losses while still allowing you to make reasonable gains. If you are attracted to this type of investment, we can help you purchase a plan. Contact the talented insurance professionals at Alvarado Master Agency to get started.

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