Fixed Indexed Annuity

A Fixed Indexed Annuity (FIA) is a useful financial planning tool for tax-deferred growth of money and retirement income planning.

 

An FIA is a contract between an individual or married couple with an insurance company stating that, in exchange for a single premium payment or a series of payments, the insurance company promises to pay the annuity owner the sum of the premium payments and any growth in the future. 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guaranteed Lifetime Income

  • The FIA will guarantee a specified lifetime monthly income for the remainder of your life, starting at a certain age, as early as 60, by adding an Income Rider

 

 

 

Choose Your Withdrawal Options

  • Full and/or Partial Surrender of Annuity
    No surrender charges will be incurred after the surrender period is over

  • Periodic Payments for Life
    Annuity payments are made until the annuity holder’s death

  • Joint Life with Last Survivor
    Annuity payments continue until the death of the surviving spouse

  • Term Certain
    Annuity payments will be made for a specific period of time

Some FIAs will allow annuity owner access to the annuity money for nursing home or terminal illness financial needs.

 

 

 

Taxes and Fees

  • Tax deferral of interest income until money is withdrawn. No annual taxable income to report.

  • IRS Penalty (10 percent) will apply to early withdrawals prior to age 59 ½.

  • Surrender Charges (fees) will occur for withdrawing money before a predetermined lockdown (usually 7-10 years) of the principal. Generally, 10 percent of the principal can be withdrawn every year (starting in the second year) without any surrender charges. ​​

Is an Annuity Right for Me?

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An FIA pays a rate that is tied to a market index. A market index (Dow, S&P 500, Euronext100, etc.) is a hypothetical portfolio of investment holdings that represents a segment of the financial market.

 

The annuity will not pay the full positive return of the index, but there is a guaranteed minimum interest rate of return, and the principal is protected, even if the index return is negative. There is a potential growth of principal from any positive market returns. There is a death benefit which will fluctuate yearly depending on the amount of withdrawals.

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