Learn About the Benefits of an Annuity

Is a Fixed Index Annuity Right for Me?

A fixed indexed annuity, or an FIA, is a contract with an insurance company. You first agree to place funds into an annuity, then the insurance company agrees to pay you a fixed interest rate on that money over a certain period of time, 10 years, for instance. The first phase is accumulation, during which your money will grow. Once the waiting period ends, the payout phase begins, and you can begin to receive payments, while still keeping your money safe.

What are the Benefits of an Annuity?

When learning about retirement options, many people will ask if FIAs are a good investment. The answer is clear once you learn a few key points, but you need to understand that every situation is different. It’s important to take your time in figuring out if a product is right for you. You want to make sure that an annuity can help you by providing you with enough to live off of in retirement. Take a look at your goals for retirement. Do annuities fit with your goals? In order to make an informed decision, it’s important to understand the benefits of an annuity.

3 Key Benefits of an FIA

So what are the benefits of an annuity? Understanding the benefits of an FIA can help you make in informed decision as to whether they’re the right choice for you. The products can offer index interest potential, tax deferrals, and other benefits that could help to protect you. It’s because of these benefits of an FIA that your retirement income could be in a safer place with one.

Indexed Interest Potential

An FIA may present a chance for interest growth. This is based on the changes in indexes. Due to potential indexed interest, fixed indexed annuities provide a custom potential for growth, and because the interest your contract occurs is tax-deferred, there’s a chance it could earn assets quicker.

Tax Deferral

Under the current federal income tax law, interest accrued on your FIA contract is tax-deferred. This means that you won’t have to pay ordinary income tax on any taxable portion until you start to collect payments from your contract. Additional federal tax or a surrender charge may apply if payments are taken before a retiree is 59 1/2, a 10%. Payments are taxed like ordinary income.

An FIA can Offer Protection Benefits

One of the benefits of an annuity is the level of protection an FIA can provide. It can benefit you in three different ways:

Guaranteed Income:

A guaranteed lifetime income annuity can help counteract the risk of outliving your retirement savings. Retirement has changed in America, and many retirees are living well into their 90’s. If you have concerns about living past your retirement savings, a fixed index annuity might be an option for you. This is because it generates a reliable stream of income that can’t be outlived. Additionally, you have multiple choices when it comes to how and when to withdraw payments. Some of these options include receiving a guaranteed monthly check for the rest of your life.


Your principal and credited interest are protected.


One of the benefits of an annuity, such as an FIA, is protection that exists beyond your life. If you pass away before you start collecting payments, an FIA may help to provide for your loved ones after you’ve passed. In some cases, even if you pass away after you’ve started to receive payments, there’s a chance that they can still receive a death benefit. Your beneficiary or beneficiaries can collect this money as one sum, or in individual payments.

Fixed Index Annuities and the Stock Market:

So, are FIAs a good choice for investigation? Well, it’s important to remember that FIAs don’t use the stock market to produce earnings. Instead, insurance companies will use what’s called an “index.” The insurance company guarantees a minimum interest rate. That means that, if the stock market declines, it’s the insurance company, not you, that’s taking the risk. With an FIA, the interest rate remains steady, no matter what the stock matter is doing. So if the stock market trends downwards, your FIA remains untouched.

Are Fixed Index Annuities Good in Terms of Interest Rate?

An FIA’s index rate varies based on a few key points. Insurance companies offer a variety of different insurance products, all with different advantages and choices. Depending on the company, product, and options that you pick, your interest rate may vary. Here at Relayer Benefits Group, we only work with trusted insurance companies with good reputations. Generally, you should look for a reasonable rate of return. However, it’s best to keep in mind that the insurance company is guaranteeing your earnings rate. In many cases, they’re providing income for life. This low-risk investment might mean you don’t necessarily see a high ROI, but it also means you don’t have to worry about losing money. You get to keep your hard-earned money safe, all the while maintaining a reasonable rate of return.

Learn About Your Annuity Options

When thinking about your annuity choices, it’s important to educate yourself and to review all of your options. Are FIAs right for you? You can make the choice yourself with the help of our experts. Just give our team at Relayer Benefits Group a call, and we’ll help you answer your questions and guide you to make the best decision. Learn about your possible options at one of our educational seminars.