We Believe in the Green Line
What is the Green line?
- The GREEN line indicates Fixed Index Annuities
- The BLUE line indicates Banks, Credit Unions, CD's, Fixed Annuities
- The RED line indicates the rise and fall of the Stock Market
Which do you think is the better line?
|The fixed index annuity outperformed the S&P 500 over the last decade. How much risk to principal
does the fixed index annuity owner bear due to market fluctuations? Exactly ZERO. Why? Because in
a good fixed index annuity, the principal AND interest are never subject to stock market declines. Any
interest credited at the end of the year is locked in and protected against stock market losses. With
today's volatile markets and treasury rates at historic lows, a product that shares in the increases of
the stock market index, but not the losses.
Throughout the last decade, in a good fixed index annuity and interest was guaranteed and protected
from stock market index losses. You will see by comparing the GREEN, RED, and BLUE lines that
when the stock market index goes up, the fixed index annuity has the potential to increase; but the
fixed index annuity experiences no losses due to the stock market index going down.
When you buy an annuity you are agreeing to hold the
contract for a certain time period. The time period can be
as short as one year and as long as forty years. Annuity
contracts typically fall between five, seven and ten years.
A great benefit to a fixed index annuity is that during the
time period you are able to access your money without
having to surrender the entire contract. The best contracts
allow you to take out 10% per year of the total contract
value or premium paid. You are able to have the 10%
automatically deposited into your checking account each
month or at the frequency of your choosing. There is
typically no limit to the number of withdrawals you can
take, just as long as it does not exceed the 10% free
withdrawal amount in any one year. Although 10% is the
typical free withdrawal amount, Fixed Index Annuities are
completely liquid minus a surrender charge. This allows the
contract holder the options of fully surrendering the
contract at any time. The most popular fixed index annuities
allow you to take your annuity's full accumulation value at
the end of the time period without penalty.
The cap is the maximum amount you can earn in any one year. With monthly point to point and annual cap
of about 20%. This means if the market goes up 20% then you can earn 20%, but don't count on it. If the
market goes up 35, 45, or higher, the maximum you can earn is 20%. What if the market goes down 50%
next year, how much will you lose? NOTHING, that's right!