Index Annuity: Who Does It Benefit The Most?

annuity written in post it note next to cash and calculator

An index annuity is potentially the most beneficial annuity form available to individuals. These annuities provide annuitants with supplemental investment funds that are not available in any other form of an annuity. Utilizing the current status of the market allows annuitants 80% of market gains, making them one of the best annuities. The feature of having an index-linked to your annuity can be crucial when it comes to generating an income stream that is above and beyond your expectations.

Frequently Asked Questions

The concept of an annuity can be a bit confusing to individuals who have never considered one. Many questions arise when it comes to annuities, and individuals should have the benefit of knowing exactly how an indexed annuity can best serve their needs.

What Is an Indexed Annuity?

All annuities operate similarly to a 401(k). Indexed annuities provide the opportunity for growth in your investment. An index annuity is a cost-effective way to create a reliable income stream without emptying your pockets.

Indexed annuities offer a guaranteed income over a predetermined period chosen by the annuitant. During the accumulation period, policyholders pay installments into their annuity and watch the value of it grow. During the annuitization period, annuitants receive their investments in the form of an income stream that will last them a predesignated period. Some pay-out periods may last until the end of your lifetime.

What Are the Benefits of an Indexed Annuity?

Indexed annuities offer many benefits to potential annuitants. Indexed annuities are completely customizable and may reap very high rewards when utilized correctly and with the help of a licensed insurance agent.

Return on Investment (ROI)

Annuitants can expect a significantly larger return on investment with indexed annuities than fixed annuities. Indexed annuities utilize a market index at the annuitant’s discretion and make the most out of an annuitant’s choices. Working with a licensed insurance agent and doing your research can pay off in a big way. Indexed annuities are truly the most dependent form of annuity in regards to the annuitant’s decision-making. In other words, the ROI is completely in your hands. 

Utilizing Market Upturns

Indexed annuities are tied to a specific market index including but not limited to the Standard & Poor’s 500, which monitors the market activity of 500 US companies and their products. Depending on market performance, you could earn a significantly higher rate of interest than a fixed annuity. However, indexed annuities do have set limits on the amount of return. Annuitants can expect roughly 80% of market gains rather than 100% due to participation rates. However, some indexed annuities offer participation rates as high as 100%.

Minimum Guarantees

Indexed annuities allow for potential annuitants to take full advantage of market performance. The negative effects of market downturns are noticeable in your decreased rate of interest, but there are minimum guarantees as it relates to indexed annuities. The annuitant will never have to worry about losing their hard-earned money in an indexed annuity.

How Can I Learn More About Indexed Annuities?

Begus Insurance Group has been offering individuals expertise in regards to annuities for over a decade. Our licensed agents provide great insight and advice to anyone who has questions about how an indexed annuity can best suit their needs. If you have questions about indexed annuities, or simply want to learn more about the annuity process, contact Begus Insurance Group today for a free consultation