Finding Indexed Annuity Value

From time to time it’s helpful for a review and for me to help consolidate all the content on this site. Much of the annuity information available online is poorly researched an inaccurate. It’s not to say you can’t get good answers elsewhere but I’m confident this is the best resource. But it can be hard to find the exact thing you are looking for and not all podcasts are relevant to all people. Indexed annuities are a popular product for lots of reasons so I have worked hard to get straight talk to as many people as possible. This post is a good access point for a lot of general information and the search bar the the main page is an incredible tool that will make your search easier.

Don’t Just Jump Into Index Annuities

Many people ask why I talk about indexed annuities so much and I’ve said this before.  It’s simply because the products require more explanation than any other.  And it’s what most people are pitched when they first start looking, many without understanding that there are other annuity options that will help them reach their goal.  Last year I thought it would be important to remind everyone of this so I recorded this episode.

Speaking of the hardcore sales pitch, often the basic components of indexed annuities are not explained properly.  This comes from over-aggressive agents that would rather just put something flashy in front of you.  Bonuses on contracts are frequently the only thing someone remembers about the presentation and there are many types of bonuses.  Most are not free money and only enhance another benefit like lifetime income or death benefit.  Others do boost the account value at issue and can be seen as free money.  But, no matter the type of bonus, it will always come with a reduced benefit elsewhere.

Read More On Bonus Annuities

The number one reason to use an annuity is safety.  Annuities are meant to protect assets from risk.  The below podcast addresses this core benefit for each type of annuity.

The core value of indexed annuities rests in the guarantees.  Yes, the principal cannot lose value but there is currently some yield in addition that comes as part of the contract.  It’s a benefit that many agents overlook or don’t even understand but that doesn’t mean it isn’t important.  The minimum guaranteed values set the foundation for upside potential.

The Full Guide To Minimum Guaranteed Values

Of course one of the easiest annuity options to understand is the multi-year guaranteed annuity or MYGA that offers a guaranteed interest rate for several years.  As rates began to rise a couple years ago, many opted for the simplicity of these contracts and there’s nothing wrong with it, but it’s important to realize that growth potential within indexed annuities is much higher as well.

This is why I think index annuities are better than fixed annuities (MYGAS)

With indexed annuities, it’s all about protecting the downside and getting gains that come close to market returns.  I haven’t addressed this specifically in the podcast but a couple of old newsletters show some nice indexed annuity yields.  One kept pace with the market and the other showed a positive yield when the market was down.

Case Study on Double Digit Annuity Yields

Plus, Here’s What It’s Like To Own A Good Annuity

The point is that many indexes available inside annuities have bond components that can return positive results when the market declines. Others have inverse options that essentially allow you to bet against the market.  If the market drops you get a positive interest credit.  It’s not always consistent but it is possible to get positive yields in ever market there’s always a chance to make money.

See Which Index Annuities Grow When The Market Drops

On the subject of growth potential, indexed annuity rates are an important topic to discuss.  Cap rates, participation rates, and spreads or margins have been covered extensively.  Just a couple months ago I hit this topic directly, which is helpful for anyone who wants to know exactly how to analyze the opportunity and get a good idea of what can be expected.

Index Annuity Rate Adjustments Part 1

Index Annuity Rate Adjustments Part 2

Guaranteed Index Annuity Rates

Income is one of the most popular reasons to use indexed annuities, and in recent years it has become one of the most profitable.  There is a plethora of podcasts and newsletter over the past several years that address the options available and advantages of using indexed annuities for income in retirement.  Just type ‘income’ in the search bar at the top of the newsletter page and a couple dozen results will appear.  Here are some of my favorites:

Case Study: Annuity Income Options

Which Type of Annuity is BEST For Income?

Guaranteed Income With or Without Fees

Does MYGA To SPIA Work for Income Control?

Indexed annuities work in retirement for many different reasons and should be considered in almost every scenario.  For all the fundamental reasons we covered above there is still one important thing missing.  The company you choose to use has as much to do with your experience over time as does growth potential or guaranteed income payments.  Doing research ahead of time will help you pick a company that is worthy of your hard-earned money.  It’s not easy to research so I tried to simplify the process for everyone with Ashok Ramji in one of my very first podcasts and offered a strong recommendation for one of my favorite companies just a year ago.

How To Evaluate Annuity Companies

Why Midland National is My Favorite Annuity Company

This all comes together to create my basis for product recommendation that is different for every situation.  It all must be evaluated and it is a lot of work to get it all done.  You are fortunate that the work has been done and it’s all consolidated in order to save you some time.  Goals come first and then product selection.  Keep it in mind as you explore the opportunities of using indexed annuities in retirement.  The value is there but it has to match your goals and expectations.

Podcast Episode: How To Find Indexed Annuity Value

Download the episode “How To Find Indexed Annuity Value” on Apple Podcast

Last Updated on June 28, 2024 by Bryan Anderson