Annuities:
Understanding the Basics
How Annuities Work
An annuity is, by definition, an arrangement with a company to receive fixed payments over a set period of time. Typically, an annuity has the possibility to provide guaranteed* payments for life. These products also come with a higher level of flexibility compared to many other options. For example, you may choose whether to receive payments monthly or annually.
How Annuities Work: The Basics
The risks associated with an annuity differ according to its type. For example, some annuities do not lose money when the stock market falls, whereas others do. A fixed indexed annuity (FIA) is safeguarded in the case of a stock market decline, but a variable annuity may lose money in this scenario. Because we prioritize safety, we can assist you in selecting an annuity product that will protect your money while still providing a reasonable rate of return.**
Fixed Indexed Annuity
To clarify, an FIA provides the benefit of protecting your money. This is because it does not fluctuate with the stock market. Instead, you contribute a set amount of money, and the insurance company that issues the annuity promises to pay you an index-based interest rate. There is also a specified period.
While not directly invested, your fixed indexed annuity (FIA) is connected to the stock market. When the market rises, you can expect a reasonable return.** When the market falls, however, your principal is safeguarded. The insurance provider is obligated to protect your money under the terms of the contract.
Need help understanding more about how annuities work?
