Four Common Fixed Annuity Misconceptions

Mike Gann Uncategorized

About the Author

Mike Gann
Mike Gann

Mike, the founder of Advantage Retirement Services, believes client relationships are much more than just meetings and handshakes. His goal and wish is to help enhance his client’s retirement years.

Confusion about Fixed Annuities stems from the fact annuities have greatly improved over the past 20 years. Now, annuities offer more options, benefits and value than ever before.

Considering a fixed interest annuity or a fixed indexed annuity (FIA)? Financial products offered by insurance companies are FIAs. The insurance company contractually guarantees to protect your principal and give you the potential for growth linked to an index, such as the S&P 500, Barclays…. With an FIA, you choose to receive guaranteed lifetime income, or simply let it grow tax deferred!

Misconception #1: Retirement accounts are not benefited by being in an annuity

Facts: Two essential benefits and features of Fixed Annuities – 1) the guarantee that you will never lose your principal; 2) when you begin to take income, you will never out live your money. 401(k)s and IRAs, by themselves, do NOT provide any asset protection from stock market losses, nor will they provide guaranteed lifetime income streams. An IRA annuity is also “Stretch Inheritable” and can be multigenerational.

Misconception #2: Annuities charge high annual fees

Facts: With a Fixed Annuity, the only time you may be charged a fee is if you choose to add an optional policy rider. For instance, if you choose an income rider, or a family endowment rider you may be charged a low fee in exchange for these added benefits. A simple 3 or 5 yr. fixed interest annuity account has no fees, unless you surrender the entire account early.

Misconception #3: Annuities are too complex for the average person

Facts: An annuity: simply a financial contract with an insurance company instead of a bank. When you deposit funds into a fixed indexed annuity, you are guaranteed that your principal is safe and with a guaranteed option for a future income stream you can never out live or the option to simply let your funds grow without risk.

Misconception #4: You can lose your annuity value when you pass away

Facts: Fixed indexed annuities, set up correctly pass 100% of your account balance, (or value) to your named beneficiaries. Your IRA or qualified value equals 100% “stretch” inheritable to your heirs. If you are choosing lifetime income, and you passed away sooner than expected, your heirs may receive 100% of the remaining value in your fixed annuity.

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