FIXED INDEX ANNUITIES
Fixed index annuities are not investments in the stock market or in the applicable indices. Rather they are long-term fixed annuities that allow you to benefit from the advantages that a fixed annuity offers such as: tax deferral, the potential to avoid probate, longterm growth, death benefit payout, and income for life. Additionally, these annuities offer an Index Account that provides enhanced growth potential without experiencing loss of premium from market loss or fluctuations with the market. If surrendered early, surrender charges may apply.
Your Index Account returns are typically based on several distinct crediting methods, allowing an index credit to be earned based on the annual performance of the indices and crediting methods you select. Examples include ...
Your Aspire Financial Professional can explain each in detail and help you determine which would be best for you.
PREMIUM BONUS FEATURES CAN PROVIDE A JUMP START TO YOUR SAVINGS*
Many fixed index annuities offer a variety of bonus / surrender charge options that can be advantageous - depending on your time investment horizon. To get a head start on your retirement savings, these annuities award you a premium bonus based on the
surrender charge schedule chosen. The premium bonus is credited to your contract upon issue and is applied to additional premiums in the first several years as they are received. The amount of years where deposits will qualify for bounus will vary by contract and insurance company. It is important to note that the premium bonus, as part of the full Accumulation Value is paid out upon death.
ACCESSING YOUR MONEY
Emergencies do arise, and access to your money is always an important concern. Fixed Index Annuities offer a variety of liquidity features. For additional withdrawals prior to the end of the surrender charge period, surrender charges may apply. Withdrawals will be treated as ordinary income and if taken prior to age 591/2 may be subject to a 10% IRS penalty. Withdrawals from your contract will also reduce your Accumulation Value accordingly.
*Withdrawals are also referred to as partial surrenders.
ANNUITY PAYOUT OPTIONS
Should you decide to receive an income from your annuity after the surrender charge period, you will have several annuity payout options from which to choose. Annuity payout options are a benefit of deferred annuities, but are not a requirement. With non-qualified plans, a portion of each income payout represents a return of premium that is not taxable, thus reducing your tax liabilities.
The following options are typically available:
• Income for a Specified Period
• Income for a Specified Amount
• Life Income with a Period Certain
• Life Income
• Joint and Survivor Life Income
Typically, Fixed Index Annuities allow you to take a penalty free withdrawal (also known as a Penalty-Free Partial Surrender) of up to 10% of your current Accumulation Value once each contract year after the first contract anniversary, without incurring any surrender charges or Interest Adjustment. Any amount withdrawn in excess of 10% will be assessed a surrender charge and possibly an Interest Adjustment. Typically, surrender charges and Interest Adjustments on IRS-Required Minimum Distributions exceeding the 10% penalty-free withdrawal amount will be waived by current insurer practices.
NURSING HOME CONFINEMENT RIDERS
These riders typically allow the annuitant to increase the penalty-free withdrawal amount by 10% should the annuitant become confined to a qualified nursing home facility for at least 90 consecutive days and after the first contract anniversary. Some carriers offer this benefit free of charge and automatically include the benefit if the annuitant is less then a certain age - seventy five for example. This rider's availability varies by state. Certain carriers may limit the benefit to only the first annuitant in case joint annuitants are named on the contract. Please consult with your Aspire Representative concerning this rider, if it is offered, and how it may be effected by your particular contract.
Surrender charges allow the Company to invest your money on a long-term basis and credit higher yields than possible with a
similar annuity of shorter term. A surrender charge is assessed on any amount withdrawn, whether as a partial or full surrender, that exceeds the penalty-free amount applicable. However, surrender charges on any portion of an IRS-Required Minimum Distribution exceeding the 10% penalty-free amount are waived by many Insurance Companies current practices. There are tables detailing the declining charges by the option chosen in the product brochures and should be carefully looked over so you have a good understanding of the plan before deciding if that plan is appropriate for you. Additional premiums deposited into existing contracts will maintain the surrender charge schedule set forth by the initial premium. Certain payout options may incur a surrender charge. Note: Please keep in mind that a surrender during the surrender charge period could result in a loss of premium. Surrender charge structure may vary by state. Consult your Annuity Disclosure Statement for details specific to your state.
OK - LET'S RECAP ...
With an indexed annuity, you receive a guaranteed minimum interest rate, but could potentially receive a higher crediting rate based on the performance of one of a variety of market indices. Indexed Annuities allow the owner to participate in the upside potential of the market while not being exposed to its downside risk. Subject to fixed minimum guarantees, the value of an Indexed Annuity can only increase due to market growth. It will never decline due to market movement.
There are many benefits and optional benefits with Fixed Index Annuities, but each should be considered carefully. There are many types of index annuities and your Aspire Financial Group professional can show you more specifically how an index annuity may be suitable for you.
An index annuity may be suitable for people who:
* Products that have premium bonuses may offer lower credited interest rates and Index Cap Rates than products that don't offer a premium bonus. Over time and under certain scenarios the amount of the premium bonus may be offset by the lower interest rates and Index Cap Rates. Typically the higher the bonus, the longer and higher the surrender charge.
Steven J. Podgorski, LUTCF d.b.a. Aspire Financial Group, 1720 Crofton Drive, Algonquin, IL 60102