Safe Money

Protect your principal while earning indexed interest.  

With a Fixed Index Annuity, no matter what the stock market does, your principal increases or remains the same: once your contract earns indexed interest, it is locked in.
 
In simplest terms, a Fixed Index Annuity is an annuity contract (a contract between an insurance company and an individual or individuals agreeing to pay an income in the future in exchange for a premium) with an interest rate linked to a stock market index (in our example we used the S&P 500). As the linked stock market index increases in value, your contract value increases, but as the stock market index declines, your contract does not lose value. You cannot lose your principal and once you have earned indexed interest it is locked in. And Fixed Index Annuities are tax deferred: You will not pay taxes on any interest credited to your contract until you make a withdrawal.


In the chart below, you can see the performance of a $100,000 Fixed Annuity with indexed interest linked to the S&P 500, compared to a $100,000 direct investment in the S&P 500 from 1997-2007.
  
 
Let’s walk you through this hypothetical example (provided for illustrative purposes only and not intended to represent past or future results or to promote any specific product or company): We start with two people with $100,000: One chooses to buy a Fixed Index Annuity with earned interest based on the performance of the S&P 500 while the other invests directly in the S&P 500.
 
The Red Line represents the investor in the stock market. Take a look at the stock market performance on the chart above with its highs and lows.
 
Now look at the Green Line representing a Fixed Index Annuity on the same chart. In a year when the market goes up, you earn indexed interest. In a year when the stock market goes down, your principal and the indexed interest you have already earned is locked in.
 
And don’t forget: Even in a year when the stock market falls your contract value, based on your credited interest, remains the same. And if, in the next year, the stock market index increases, your contract will earn indexed interest.

 

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