You may have seen TV ads sponsored by Ken Fisher screaming, “I Hate Annuities."  But, in an article which appeared in Forbes Magazine, Fisher stated, “Folks ask why we run them.  Simple: Because I do.  Granted, some ‘fixed’ types are okay.  But that's about it.”  So, when Ken Fisher says he hates annuities, he’s talking about “Variable Annuities” and not the new generation of the fixed indexed annuity recommended by us!  Fisher sells investments, and his fee is based on the increase in his clients’ investments.  When they make some money, he takes part of it!

The original fixed indexed annuity introduced in 1995 is different from the “Immediate Annuity” concept introduced over a century ago.  It is not the annuity where you hand-over money to a life insurance company and kiss it goodbye to receive a monthly check for the rest of your life.  Rather, it looks like a bank account.  You deposit money, earn interest, and withdraw money to supplement your social security income.  You control everything.  Upon death, the money in your account passes to your beneficiary. 

The fixed indexed annuity’s interest rate is linked to the gains of a stock market index, usually the S&P 500 Index.  When the index increases over the contract year, you earn money.  If it goes up a lot, you earn a lot.  If it goes down, you earn zero, but you never lose any money.

The new generation was introduced in 2015 by several life insurance companies.  Each company uses its own version of the new generation indexes.  For example, the interest rate is based on the gains of several asset classes; such as, domestic stocks, international stocks, emerging market stocks, gold, real estate, and bonds.  The index applies a rules-based approach to eliminate emotion, bias, and the need to time the markets.  The asset classes are rebalanced each month to reduce risk and correlation while leveraging positive short-term momentum.  Daily risk control is applied, which seeks to further reduce risk.


The result is an index that seeks to provide a broader level of diversification to help generate consistent returns in good and bask market environments.


This company’s hypothetical illustration calculates the annual accumulated account value using an average annual 9.10% interest over the last ten years.


By adding the Enhanced Death Benefit feature, this company adds a 10% cash bonus to enhance the overall performance in the accumulated value.  The Enhanced Death Benefit increases the death benefit annually to offset some of the withdrawals taken to supplement your social security income.  In other words, you can take some money out and recover the withdrawal for your beneficiary's use. You can request an company's illustration to see how it will work for you and your spouse.

Now, let’s compare the new generation fixed indexed annuity (FIA) with the earnings of the average investor.  According to the 2017 Dalbar Quantitative Analysis of Investor Behavior Report, the average mutual fund investor under-performed the S&P 500 Index by a margin of 4.70%.  While the broader market made gains of 11.96%, the average stock market investor earned only 7.26%.  Over the past 10 years, investors earned an average annual return of only 3.64%.  Clearly, you can earn more money using the new generation FIA.


Additionally, there is a new generation indexed universal life insurance with a unique way to offset long-term care expenses out of the death benefit.  It's an excellent produce for individuals who have not purchased tradition long-term care insurance.  People shift money from their cash reserve as a single premium payment, and once the policy is issued, you can still access most of the accumulated value for emergencies.  

 

 

 
 
 
.

                                        
                              

INDEXED RETIREMENT STRATEGIES