New Index Annuity Calculator


Understanding  the benefits of an index annuity can be a daunting task for investors, but it’s totally worth the effort to become proficient and give these a serious look.

Index Annuities are very safe investments much like a fixed annuity, yet they have the possibility for gains linked to a market index.  And further, they can go up but not down due to the methods used to generate the market participation.

There are index annuities oriented towards appreciation, and there are index annuities geared towards the income rider.  Most people are familiar with index annuities in conjunction with income riders- these are often known as Hybrid Annuities.  But outside the guaranteed lifetime income rider component of Index Annuities lies the potential for a very safe appreciation vehicle.  

The nice calculator below is wonderful for illustrating the power of annual reset – this is an index annuity crediting method that builds account value annually (subject to participation and caps).  Use the start year to scroll through turbulent years and see how the annuity would perform.

Your comprehensive annuity investment guide: Annuities.

This calculator comes from another online resource so we can’t vouch for the complete accuracy of the historical data sets.  So please use this for a visual illustration and give us a call to select the best fixed index annuity with the highest crediting methods and most beneficial caps and participation.

CD vs Annuity Idea


Okay, we all know there are a lot of people with money sitting in CD and money market accounts that are currently yielding very little interest. With the uncertainty in the global economy, I can certainly understand why many are choosing to play it safe for the time being. Are you one of those people?

Would you like an alternative with more potential? For the most part I stay away from general product recommendations without knowing your specific situation, but sometimes it helps to demonstrate how annuities can be used in the proper context. This one is very simple and we’ll consider a five year time frame with a particular fixed index annuity that is currently available in the market.

CD Vs Annuity: Comparison-

This product will pay a minimum guaranteed rate of 1.5% and also allows for up to 5% interest credit if the market performs well. Let’s assume you have a CD or money market fund paying a similar minimum interest rate, which could be more or less depending on your specifics.
With an initial premium of $100,000, this annuity will return $107,728 in the absolute worst-case scenario. If the stock market returns positive in at least one year, the total yield will be even higher. And who knows, maybe you’ll win more often than that.
Now your CD or money market may have the same guaranteed base, but I’ll bet it doesn’t allow for higher yields with positive stock market performance. Not to mention the fact that the annuity allows for tax deferred growth as compared to the annual taxation of the alternatives.
The best part is that the annuity is terminated after five years so you aren’t locked in to a lengthy contract. You should know by now that I’m a big proponent of flexibility and this product provides that with enough growth potential to make it worth a closer look.
If you are interested in this product issued by an A+ rated insurance company please call or email for more information so we can see if this is a match for you.
Take care and feel free to contact me at your convenience.
Bryan J. Anderson

About The Fixed Indexed Annuity (AKA Equity Index Annuity)


We all know by now that saving for retirement is imperative to enjoying our golden years. But what isn’t always clear is where to invest the money that we save. An annuity through an insurance company or financial institution can be a great vehicle for retirement savings as it offers a long-term contract that makes interest payments.

Be aware that the Fixed Indexed Annuity is also referred to as the Equity Indexed Annuity.  These are the same products.

The fixed indexed annuity return is based upon the performance of a stock or other equity index. So if they perform well, your will reap the rewards, and vice versa if they do not perform well. As with any investment, to be fully vested and secure all the benefits, you should invest your money in an equity index annuity for at least 7 years.

Insurance companies offer fixed index annuities as another financial product. Basically, you are investing in the stock market risk free. Your principal is not at risk, and you can enjoy interest returns. However, the interest returns you receive will only be a percentage of the actual returns the stocks yield. This is the price you pay for enjoying the safety net on your principal.

This price pays the insurance companies for assuming the risk. The gain of the index or percentage of returns that the fixed index annuity yields is calculated by the participation rate. This rate is in the annuity contract’s finer details and is determined by the insurance company. A general rule of thumb is 70-90% in most contracts.

How Does a Fixed Indexed Annuity Work?

Fixed  index annuities have become known as conservative investments. Their rise in popularity is in part due to the bullish market of the past. You can enjoy some of the rewards of rising stock markets, without the associated risks. Fixed index annuities provide a minimum interest rate and it will not go lower than the guaranteed minimum of the premium paid.

To fully realize the benefits of an fixed index annuity, early withdrawal is a no-no. Even withdrawing a portion of the balance will hinder your results. In addition to withdrawal penalties you would incur, equity index annuities will yield the best results long term. There are market fluctuations and investing wisely means riding those fluctuations out.

Insurance companies offer fixed index annuities to reinvest the paid premiums, usually into bonds. As they have already fixed in place the participation rate, they can keep anything they earn over and above this.

Fixed index annuities are tied into the performance of a stock market index , such as the Dow Jones Industrial Average of the S&P 500. They don’t, however, necessarily, fall into this preset category as this type of annuity also carries traits of a traditional insurance product and a security.

Traditional insurance products have guaranteed minimum returns. Securities are tied into the equity market. Depending on the particular equity index annuity it may or may not be classified as a security and probably is not registered with the SEC.

Find The Best Fixed Indexed Annuity

So then how does one know which fixed index annuity is best for oneself? The only way is to find out as much as you can about the equity index annuity before you decide.

Ask a lot of questions like which stock market index does the equity index annuity use? What participation rate is being offered to you? Are there any hidden charges in terms of any fees or deductions payable? You have to run through a number of equity index annuity offerings before making your decision.

You should do your research before selecting an equity index annuity. Determine what stock market index it is tied into, what the participation rate is, and any fees that are associated with the contract. Keep looking until you find the one you are comfortable with.

A fixed index annuity can help make your golden years not only enjoyable, but worry-free.


Fixed Index Annuity Rates


There are many components to fixed index annuity rates, and they have plenty of working parts that make the contracts seem complicated when they don’t need to be. Among the perceived complexities are the various rates that contribute to overall contract performance. A true professional takes a surgical approach to the analysis so let’s go piece by piece and when finished I think you’ll agree; fixed index annuities aren’t that complicated.

The Various Fixed Index Annuity Rates:

Declared Fixed Rate- Most index annuities offer the option for a simple fixed rate that is exactly like the rate offered in a plain old fixed annuity. Each contract will note the current declared rate, contractual minimum renewal rate or specify that the rate is guaranteed for the entire time period.

Participation Rate- This tells you the percentage of the associated market index that will be credited to the account when asset values are locked in.

Cap Rate- This indicates the maximum amount of interest that will be credited to the account when asset values are locked in.

** Pertaining to Cap and Participation rates, asset values typically lock-in annually but can do so in several other annual time periods as specified in the contract. This is called a contractual reset which can range from one to ten years.

Guaranteed Income Growth Rate- One of the more popular additions to fixed index annuities in recent years is the opportunity for guaranteed lifetime income regardless of account performance. With this option, the account value will grow only when the market does while the income benefit is guaranteed to increase at all times. This affords the contract owner of some level of certainty as to what level of retirement income to expect.

Death Benefit- Many fixed index annuity contracts offer an optional death benefit. With this the contract owner is guaranteed the greater of the account value or a guaranteed annual percentage increase at death.

Payout Rate- When the option for guaranteed lifetime income is elected, payments will be calculated based on the age of the contract owner and joint annuitant if applicable. Different payout rates will be available based on these factors an expressed as a percentage of the guaranteed income benefit or account value, whichever is greater.

Fixed Index Annuity Rates Summary:

This basically sums up the various rates that indicate the potential performance of a fixed index annuity. As there are several moving parts to this type of annuity product, all of the points above relate directly to certain contract provisions that require further explanation for proper knowledge before purchase.  Feel free to Contact Us  for help in selecting the right annuity for your unique situation.

Refer to additional information on this site for more detail on the inner-workings of fixed index annuity contracts. If you are considering the use of a fixed index annuity for retirement income planning be sure to seek the advice of an unbiased professional. The Annuity Report is a great place to start… sign up below for more info on annuities.