Indexed Interest Potential

The Flexibility of a Fixed Index Annuity

Flexibility is key in any long-term strategy.  A fixed index annuity (FIA)  not only provides financial security and income stability but also flexibility. One advantage would be the chance to choose your own index. A crash in the stock market does not pose any risk to you. This is because you’ll be able to select an external index to link your FIA to but not purchase stocks directly. With this, you can earn interest based on index performance. 

The crediting method is another option available to annuity buyers. The insurance company uses a set of rules and timeframes to figure out how much index interest if any, you will get on your annuity. For example, you may choose an annual or monthly crediting method. Other crediting methods use averages over a period of time. Others base their interest on the differences in rates during the same period. Still, another marks the change in the index as compared to the FIA contract anniversary date. The interest is calculated based on that change one year later.

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How to Protect your Money

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One of the greatest features is the safety of your money. The value of your index will not decrease even if it drops. Legally, insurance companies must protect your money. When your index performs well, you can benefit from it. You are also protected against losses by your insurer.  A reasonable rate of return** is set by the insurance company. Consequently, this protects your retirement earnings from market fluctuations. Retirees can feel confident knowing that their retirement income will not outlive them.

Can A Fixed Index Annuity Grow With Time?

Begin by aligning your annuity with one or more indexes. Our team at Hybrid Financial can guide you through the process. Diverse indexes offer you a number of possible interest options. Next, the insurer will use a crediting method to track the performance of your chosen index (es). Lastly, the policy provider sets the interest rate at the end of each year.

Indexed interest is earned when the rate exceeds a certain point. Annuity values do not decrease if the index drops. Situations vary from one another. Every individual will, therefore, choose their annuity differently. During your meeting with our team, we review all of these terms and make sure they are clear. We also offer seminars where you can learn more about the specifics of a fixed index annuity. Your retirement decisions can have a lasting impact on your life. The more information you gather, the better.

What Factors Influence Potential Interest Rates?

Fixed index annuities can earn a maximum interest rate under certain circumstances. A cap usually lasts for one month or a year. The index rate does not apply if your selected index exceeds the cap.  The cap rate will be used instead to determine the interest rate.

The participation rate in some fixed index annuities is calculated after the cap. A percentage of the index increase sets your rate – not the whole thing.

A spread is used in some annuities to calculate interest. For instance, suppose the annuity spread is 4%, and the index increases by 9%. In that case, the annuity contract would receive a credit of 5% indexed interest.

A fixed index annuity (FIA) is not a “one size fits all” product.

Contact us to learn if a fixed index annuity works for your retirement strategy.

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