Annuity Benefits

Annuity BenefitsWhen writing and speaking about annuities, I sometimes get caught up in products and contract specifics and need to zoom out to the big picture now and again.

Lets take a moment to look at the highest level view of annuities, where you really have just two types of benefits.  These are either Lifetime Income, or Fixed Term, solutions.

Fixed Term Options

Fixed term annuities, like Secondary Market Annuities,  Fixed Annuities, and Indexed Annuities, offer a known length of  term.  SMA’s and FA’s will also have a fixed appreciation rate.

Payouts from any of these products can either be lump sum, or income.  You can find fixed appreciation, fixed term lump sum payout annuities (SMA Lump Sums are highest yield), or you can find fixed appreciation, fixed term income streams that payout for a defined period of time.  These are SMA immediate and deferred income.

Fixed annuities and Indexed annuities also offer these defined lengths of time, and they offer additional benefits of some liquidity and surrender value, which SMA’s do not have.

With a fixed appreciation rate you have the ultimate in guarantees.  Put in X today, and you know your will get Y out in the future. Period.  This can be hugely rewarding and there are excellent yield opportunities in this avenue.

Lifetime Options:

Immediate Annuities simply trade assets for income- a one way ‘annuitization’ path.  This can be very lucrative, but is a hard mental leap to give up control of assets.

If you’re seeking to maintain some level of control over your assets, or want the potential to leave an inheritance, you will need to consider annuities that offer an investment account as well as a potential income account.

The best lifetime income with account value offering today is the Hybrid Annuity.  This is an index annuity with a lifetime income rider that can be turned on in the future.  This provides you with the potential for appreciation in the markets, no risk of loss or downside, and lifetime income protection, all in one product.

Give us a call today if any of these types of annuities and benefits suit your situation.  800-438-5121

Appreciation Rate:

In the fixed term section, you saw that many fixed term lump sum and fixed term income cases have a fixed appreciation rate. But what about the appreciation rate in other kinds of annuities?

If you are leaning towards lifetime income annuities that offer both the investment account and the income payout, the next big division to consider is the appreciation method that suits you.

Variable Annuities With Lifetime Income grow and decline with the markets.  These are NOT a great option for safety, and furthermore, many carriers have scaled back on variable annuity offerings in recent years.

By contrast, Fixed Index Annuities with Lifetime Income Riders grow based on a market index, such as the S+P 500, with no risk of loss.  These are sometimes known also as Hybrid Annuities.

It’s important to keep in mind here, however, that the primary benefit you are buying is the lifetime income.  The investment should have performance, but they are an added benefit above and beyond the primary benefit of the lifetime income insurance.


It’s critical to know the benefits you seek when considering annuities.  It’s easy to move from seminar to free lunch to product marketing flyer and get quite confused by specific product terms and riders and conditions.

Save yourself the confusion by letting us help you focus on your goals first.  Once we identify the types of annuities that accomplish your goals, you can buy with confidence.  We can help- give us a call.


Written By

Bryan Anderson

2 thoughts on “Annuity Benefits

  1. What upside in annuity of this hybrid type are you talking about. been shopping for a while and all i see is 2-3% caps. Also, if there is a rider on the policy and it makes zero where does the fee come from?

    1. Steve- 2-3% is not a great cap or total participation rate. Chances are, in the contracts you have been looking at, you are ‘buying’ other benefits and consequently the caps/ participation is lower. To your other point, if there is an income rider with a fee, it’s deducted from the account value. So in a flat year, you may have a charge to the account for the fee. The effects of this will be subject to the guaranteed minimum surrender value of your particular contract.
      Give us a call at 800-438-5121 to go over your needs specifically to see if we can show you some better contracts.

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