Indexed Annuities They Hybrid Annuity For Retirement Investors-sayu-02

Personal-Finance Newer products on the market that rival the popularity of both the fixed annuity and variable annuity are the indexed annuities. Indexed annuities offer the stability and safety of the fixed annuity and the potential for more growth and inflation fighting properties of the variable annuity. The indexed annuities use a specific index, such as the S&P 500 as the basis for the growth of the policy. They offer a low base return if that particular market doesn’t increase or remains flat. If, however, the market grows, then policy offers the owner a percentage of the growth or the entire amount. Most policies contain a cap. By using a percentage of growth and cap on the return, in good years, the insurance .pany recoups the money they lose if the index drops and they pay the guaranteed rate. The lower base rate, cap and percentage of growth are your payment for participation in the lucrative years. Assess you situation to see if indexed annuities are right for you. The product often fits perfectly into your portfolio if you’re a soon to retire or younger retiree and you want to avoid risk. For those that are in their advanced senior years, the higher guaranteed rate of the fixed annuity often serves their purpose better. However, if there’s a need to diversify investments they should consider this choice. Another factor in deciding which of the indexed annuities is best for your situation is your need to access the funds. Some people simply want the tax deferred growth provided by the annuity and a higher potential for growth. They have enough assets to know they’ll never use the funds and simply want to pass them to heirs. Penalty free access is of no importance to this type of person. If you worry that your emergency fund might not handle all the potential emergencies, or know you’ll need some extra dollars in a few years, the penalty free access is important for you. Just like the penalty free access, the surrender period penalties and length varies in importance from individual to individual. If you have specific plans for the money in future years, always check the length of the surrender period. Of course, if you’re younger than retirement, annuities might not be the best product for your situation. Since annuities have tax deferred status, they operate similar to an IRA when you withdraw funds. If you’re under the age of 59 , you pay a 10 percent penalty on the growth of indexed annuities when you withdraw money. You also pay taxation on the growth at that time. Since the IRS considers the interest the first removed from any policy, any amount you take out has a tax penalty and taxation. Look for the various percentages of participation and caps on the policy before you invest in indexed annuities . The index the policy uses as its basis is also important. The easiest way to .pare indexed annuities is with the use of websites that show .parisons of several policies. These sites often don’t sell policies but simply provide information for the concerned consumer. About the Author: 相关的主题文章: