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The fixed-indexed annuity gives the client safety, a potential upfront premium bonus of as much as10%, plus a 6.5% guaranteed interest rate on the income account value, used for calculating lifetime income benefit payments* that you cannot outlive.
Think about a person's ability to develop an income stream in retirement. An income stream is what retirement is all about, is it not? In regard to retirement income, the financial services industry is turning to the insurance industry to provide guaranteed monthly income their clients cannot outlive. Annuities are also seeing a substantial increase in demand due to the safety of fixed "CD-like", and fixed-indexed annuities.
Riskier, market sensitive investments, such as stocks, bonds, and mutual funds are different financial instruments, and may provide more upside potential. However, market sensitive investments with greater upside potential, also come with greater risk, and may subject the consumer to even greater potential to the downside. One must also take into account the costs associated with particular market sensitive investments, as such costs serve to deepen potential losses, making it that much more difficult to recover when the market has a down year, especially if the consumer is taking withdrawals from their investments. Costs deplete client assets, and excessive costs deplete the client's assets to an even greater degree.
The real merit of these insurance products (fixed-indexed annuities), can be easily seen in a black and white, one page examples. Ask your current financial professional a simple question: can he or she find a safe, guaranteed method involving securities (investments i.e. stocks bonds, mutual funds, variable annuities etc...), or bank products (CDs), which could provide you with a guaranteed lifetime income payment in excess of *7 % of your savings? Think about a guaranteed lifetime income payment as cash flow in retirement, or as a "guaranteed pension" that will continue to come to you for as long as you live, regardless of stock market volatility! Can your current financial professional guarantee you that they and/ or their firm, can provide you with a guaranteed lifetime income payment such as we have described here? Can he or she guarantee a payment that would never decrease in your lifetime, regardless of the gyrations of the stock market?
*Income Account Value only accessible through guaranteed lifetime income benefit payments. Based on male or female age 60, 0.60% fee taken from base annuity contract value annually."** Includes 10% premium bonus, calculated after 10 years of deferral.
Now, ask your advisor if he or she could find a method of providing you with a guaranteed increasing income stream in retirement. For example; based on a $100,000 deposit, accumulating for 10 years, assuming an earned interest rate of 3% ... an annuity could provide an increasing income stream of $8,182 the first year, $10,816 the tenth year, and $14,749 in the twentieth year, and this income would continue to increase each and every year thereafter, as long as you live. Ask your financial professional if he or she can do this for you.
The answer your current financial professional may give you is no, unless he or she is using the appropriate guaranteed income vehicle. The correct income vehicle in our example is a fixed-indexed annuity with the proper income rider. The right income product will ensure the consumer that they will never outlive their savings, and the right product is an income/ index annuity, providing you and/or your spouse income for life, that you cannot outlive, **guaranteed.
**Based upon the claims paying ability of the insurance company.
American Annuity Advocates wants you to know that this is yet another advantage of fixed, fixed-indexed, and income annuities. These insurance products are designed to protect you and your life savings, using insurance, mathematical life pooling principles, and actuarial tables. Only an insurance product can do this -provide an income stream you cannot outlive, and/or one that increases over time.
If this sounds too good to be true, I assure you it is not. I invite you to request an illustration, providing an analysis of your situation. Does your current financial professional have the products, the tools, and the proper experience and perspective necessary to really help you?
A 0%, 5%, or 10% upfront premium bonus, plus a guaranteed interest rate in the income account value of 6.5% has real value. A life income annuity product with a 0%, 5%, or 10% bonus is a reliable method of delivering income that a market sensitive investment will find difficult to match.
Every vehicle on the spectrum of risk and return may deserve a spot in a client's portfolio. Stocks, mutual funds, bonds, and even options, may be appropriate in various situations, but only annuities can provide the guarantees we are talking about here, as all other strategies involving market sensitive investments, contain market risk, and/or costs, fees, expenses etc.., and may not be, in our opinion, as appropriate as the income products available from the insurance industry.
Regardless of whether or not you utilize securities or fixed products in your overall portfolio, income in retirement is a genuine problem you can now solve! You owe it to yourself, and your family, to explore the options available to you.