Index Annuities

Index Annuities — Earn a higher rate when the market is up, protect yourself when it’s not


Are you at a stage in your life where protecting the money you have accumulated is your top priority? Does stuffing your savings under the mattress seem like overkill? Do you want to benefit from positive markets, but investing directly in stocks or stock mutual funds feels a little too risky? With an index annuity, you have the opportunity to get the best of both worlds.

The best of both worlds- upside opportunity and downside protection.

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Funding your retirement vision.

As with other types of annuities, index annuities offer tax-deferred growth opportunities. If you withdraw your money early, you may have to pay significant penalties – both to the insurance company and to the IRS. Index annuities give you the option to convert your investment into an income stream at some future date.

Upside opportunity, downside protection

Index annuities are designed to offer two things many investors look for:

  • Upside opportunity — Your annuity‘s interest rate is typically linked with the performance of a specific market index, like the S&P 500. When the index increases, the crediting rate will rise (up to the annuity’s cap rate1), giving you the opportunity to benefit from rising stock markets.
  • Downside protection — When the linked index remains flat or decreases the crediting rate will decrease, or may even drop to zero, but your account value will never decrease. While an index annuity has the potential to earn more than a fixed annuity, it also has the potential to earn less.

Index annuities with income benefits

Wouldn’t it be great if you could get guaranteed income for life even if the markets go down, with the potential for increased income payments if the markets go up? That’s exactly what you get when you add an income benefits to an index annuity.

The income benefit or rider adds a second value to the annuity—an income value, which is independent of the accumulation value. The income value grows at a fixed rate and is used to determine a predictable income stream. If the contract is handled properly, income will continue even if the account value has been depleted. Keep in mind, this added benefit may come at an added cost. Be sure to read all information carefully before investing.

Ready to learn more?

If you are uncomfortable about investing directly in the markets, but would like to be able to benefit from good market performance, consider an index annuity. Call us today to learn more.

1Cap rate: The cap rate is the annual maximum percentage increase allowed. Not all index annuities have a cap rate. Some index annuities may have a participation rate.