One of the most popular financial tools for retirement savings accounts is the indexed annuity.
Like Health Savings Accounts for health insurance, indexed annuities are the least understood GREAT product for retirement savings dollars. Unfortunately, like health savings accounts, most financial services professionals that recommend indexed annuities, DO NOT explain them adequately to their clients.
An indexed annuity is simply a fixed annuity that credits INTEREST in a very unique way. It pays interest based on the performance of a stock market index, usually the Standard & Poor’s 500. Indexed annuities are not at all like mutual funds which actually purchase stocks on your behalf and subject your principal value to market risk. In an indexed annuity your principal is NEVER subjected to the fluctuations of the stocks in a fund because you NEVER actually own any stocks. So unlike a mutual fund, you DO NOT lose principal value in an indexed annuity if the stock market goes south.
Without getting too technical, the insurance company pays interest to your account based on the increase in the S&P 500 index, however usually up to a cap. For example some indexed annuities will credit your interest based on the annual growth of the S&P 500 UP TO A CAP of usually 10%. Now that doesn’t sound like a very good deal if the S&P increase 21% in a year. However consider this…. Should the S&P LOSE 15% in a year your loss is ZERO! That’s right S&P 500 loss means no loss of principal value to the indexed annuity client. You wouldn’t be credited any interest that year (some indexed annuities offer minimum interest guarantees regardless of the index performance) but you wouldn’t have the loss that would have been incurred from the mutual fund.
Indexed annuities are excellent way to benefit from the upside of an upswing in the stock market without the downside or market risk because you are not actually INVESTED in the stock market.
So when it comes to retirement savings benefiting from the upside of the stock market, without the market risk, with indexed annuities you can have your cake and eat it too.
To learn more about how you can benefit from having your retirement savings dollars in an indexed annuity feel free to contact me directly at 1-877-777-7055 for more information or to have any of your questions answered.
Just Us Insurance is located in Southern California.
We proudly serve businesses and local residents in Corona, Murrieta, and Temecula.
Just Us Insurance operates throughout Riverside, San Bernardino San Diego, and Orange Counties
