Annuities

Call Today to Learn How Annuity Investments Work

Every savvy investor should know how annuities work and the income and retirement benefits that annuity products can provide. A fixed annuity can deliver guaranteed earnings and reliable retirement income. Variable and indexed annuities can deliver higher yields, but with a higher level of risk. The average investor tends to forget about the annuity investment options available to them, but we have the experience to help you become a knowledgeable annuity investor. How do annuities work? Call us today to speak with a licensed annuity investment agent.

 

What is an Annuity?

When an investor enters into an annuity contract, both the investor and insurance company are legally bound by the provisions of the contract for a given period of time. The earning potential of the annuity depends on the terms of the contract and any riders that were purchased by the investor. A fixed annuity product specifies a guaranteed minimum interest rate. The minimum interest rate typically reflects the performance of the issuing insurance company’s general asset fund. The minimum interest rate is sometimes called the minimum credited interest rate.

Fixed annuities include an accumulation phase, during which the investor is obligated to make annuity payments for the period of time specified in the annuity contract. Interest based on the minimum rate of return or a higher rate based on the performance of the general asset fund will accrue on all payments.

 

Indexed and Variable Annuities

Indexed annuities combine a guaranteed minimum interest rate and the financial performance of a market index such as the S&P 500. The investor is protected from catastrophic loss by the guaranteed minimum rate of return, but may receive even higher returns if the preferred market index performs well.

Investors also have the option of investing in variable annuity products that tie financial returns to the performance of a portfolio of preferred investment instruments. Some of the investment vehicles that are often included in a variable annuity contract are bond funds, actively managed funds, equity and mutual funds, exchange traded funds, actively managed funds, index funds, domestic and international funds and many other investment instruments. The value of a variable annuity contract depends on the performance of the sub-accounts that the contract owner decided to include in the contract.

 

How Do Annuities Work?

Whether you want to learn more about the guaranteed interest rate that a fixed annuity can provide or the flexibility and earning potential of indexed and variable annuity products, we look forward to helping you understand the annuity marketplace. It’s generally agreed that the best way to build a retirement nest egg is to fill a basket with a diverse collection of investment products.

Insurance company-issued annuities are a vital part of a balanced approach to investing for income or retirement. Want to know more about annuities and discover which one is right for you? Speak with one of our licensed insurance agents today to learn everything you need to know about our proven annuity products.