insurance

Is a Fixed Index Annuity Ideal for You?

A lot of people are very much enticed by the appeal of investments even during these trying times. A lot of them are determined to tap into a wider market, to ensure that the industry has all the necessary tools to ensure that they can save up some money and enjoy all the amazing opportunities of investing for the future. One of these things is the fixed index annuity. This is an investment that is primarily focused on corporate bonds and government securities. The idea of a fixed index annuity is guaranteed returns within a period of 1 up to 15 years. When it comes to fixed index annuity, you have two options. There are guaranteed return annuities and a market value adjusted type.

What makes the fixed index annuity appealing is the amount of returns that you could accumulate in the process. However, there are some things you must know. First, you have to be aware that with the fixed index annuity, you cannot expect all investments to be solid or stable. The strength of the investment depends mainly on the capacity and financial worthiness of the company. A lot of us may have been told that with fixed index annuity, you can receive returns either on a guaranteed plan or stock index. Much of the details are technically accurate. However, reality bites and you have to recognize this before you venture into getting fixed index annuity.

Knowledge is power. A lot of us know the fixed index annuity based on simple definitions and we tend to be smitten by these fabulous things that we hear. To really understand these aspects, you need to be really skilled with math and have a solid knowledge about investments. Basically, you have to understand that having investments does not make you instantly secure. It takes time, around 15 to 16 years in fact, so that you can get the benefits. You can say that the fixed index annuity is like a mix of insurance and investment where in you grow the money but you have to wait a certain amount of time, or else, you have to pay the penalties.

Before you embark in getting fixed index annuity, you need to understand some important concepts. For example, the fixed index annuity has stock index. That means your returns will be based on external indexes. Sadly, you do not always get what you expect. The contract requires you to sign something that you should thoroughly analyze and understand. In some cases the contract will say that the dividends will be excluded before the calculation of the index appreciation. Technically, you should get a lot from the fixed index annuity but it does not happen that way.

The fixed index annuity is a nice option to include to your investments if you have spare money for it but it cannot be a perfect substitute or alternative to equities. It is a nice option to have if you are skilled with your investments and if you have the knowledge to handle the different risks. Do you want to know more about the benefits of annuities? All you have to do is type in your zip code and receive the best rates to compare annuities.