What are Indexed Annuities?
What are indexed annuities? I hear this question a lot. It is not just people who are looking to invest their money, it is sometimes asked by people within financial advising industry but not familiar with the securities and insurance side. You may have heard of them before of even been solicited by an agent looking to sell you a policy and decided that you do not understand how they could help you. They can be complex retirement vehicle solutions; however, they are also good performing safeguards against market risk when it comes to earned income. Many people are coming to a point in their careers where this is exactly what they need to protect them until retirement without losing the ability to earn more.
Most people do understand that an annuity is a sort of conservative option that insures them against outliving their income. Many may even be familiar with the difference between a fixed and a variable. Fixed will have a guaranteed return (usually low) for the investment where as variable will fluctuate and losses can occur. When it comes to explaining what are indexed annuities, the problem lies in the fact that they are smack dab in the middle of the two previous options. Because of this, there are so many types with so many varying particulars. Some use spreads, some use caps, each may have different returns based off a certain equity numbers in relation to a participation percentage. When an agent focuses on these particulars, the message about how they help you gets lost in the translation.
What you need to know is not only what are indexed annuities but, most importantly, what do they do for you. Sorry to use such a worn cliche but they are truly the best of both worlds. With these options you get the safeguard against market risk by being guaranteed you will not lose principal due to a bad downturn in the equity it is tied to (most often the S&P 500) like the fixed options. However, unlike fixed options, there is greater potential to make more like a variable option. In fact, some have no ceiling in the policy. You are given a percentage of the growth the policy is tie to.
If you are between 10 and 15 years from retiring, you need to look at more retirement vehicles that safeguard what you have earned. However, that does not mean you shouldn’t consider trying to make more. If you find yourself in this situation, then call Advisor’s Match at 800-599-2788 so they can connect you to a professional that can further explain what are indexed annuities and, more importantly, what they will do for you.
Florida Financial Advisors 
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