Monday, August 23, 2004
Recent client questions? www.legacyannuities.com
FIXED ANNUITIES
“I’d rather keep my money safe in the bank than turn it over to an insurance company.”
Although their money is FDIC insured in the bank, that insurance only covers $100,000 in a specified account. And while banks are not required to keep the face amounts of all their deposits on hand, many state insurance regulators require that insurance companies maintain reserves that either match or exceed the principal of the annuity. What’s more, insurance companies operate under a system that is highly regulated, minimizing the chances of an insurance company failure.
“I don’t want to tie up my money in an annuity. What if I need that money in an emergency?”
Both CDs and annuities have penalties for early surrender, but many annuities allow for monthly, quarterly, semi-annual or annual withdrawals as long as the year-end withdrawal total does not exceed more than 10 percent of the annuity’s accumulated value. CDs provide a small window each year when funds can be withdrawn without penalties. If the money is not withdrawn during the annual window, the funds are automatically put back into the CD and the penalty period starts anew.
VARIABLE ANNUITIES
“I’d rather put my money into a mutual fund.”
While both variable annuities and mutual funds share some of the same benefits, such as growth potential, professional money management, and investment variety, some variable annuities offer more flexibility when re-allocating assets among subaccounts. Investors can often shift money around variable annuity subaccounts without triggering taxes, whereas similar moves with mutual funds held outside qualified accounts will incur taxes.
Equity Indexed Annuities
“I don’t want to limit my return, especially now that the stock market is rising”
Risk is commensurate with reward. “Are you prepared to lose half of your money tomorrow?” If they hesitate, they are likely more risk adverse than they realize and may appreciate the peace of mind of knowing that with an EIA, a negative annual return in the market becomes zero (for annual crediting methods).
www.legacyannuities.com
FIXED ANNUITIES
“I’d rather keep my money safe in the bank than turn it over to an insurance company.”
Although their money is FDIC insured in the bank, that insurance only covers $100,000 in a specified account. And while banks are not required to keep the face amounts of all their deposits on hand, many state insurance regulators require that insurance companies maintain reserves that either match or exceed the principal of the annuity. What’s more, insurance companies operate under a system that is highly regulated, minimizing the chances of an insurance company failure.
“I don’t want to tie up my money in an annuity. What if I need that money in an emergency?”
Both CDs and annuities have penalties for early surrender, but many annuities allow for monthly, quarterly, semi-annual or annual withdrawals as long as the year-end withdrawal total does not exceed more than 10 percent of the annuity’s accumulated value. CDs provide a small window each year when funds can be withdrawn without penalties. If the money is not withdrawn during the annual window, the funds are automatically put back into the CD and the penalty period starts anew.
VARIABLE ANNUITIES
“I’d rather put my money into a mutual fund.”
While both variable annuities and mutual funds share some of the same benefits, such as growth potential, professional money management, and investment variety, some variable annuities offer more flexibility when re-allocating assets among subaccounts. Investors can often shift money around variable annuity subaccounts without triggering taxes, whereas similar moves with mutual funds held outside qualified accounts will incur taxes.
Equity Indexed Annuities
“I don’t want to limit my return, especially now that the stock market is rising”
Risk is commensurate with reward. “Are you prepared to lose half of your money tomorrow?” If they hesitate, they are likely more risk adverse than they realize and may appreciate the peace of mind of knowing that with an EIA, a negative annual return in the market becomes zero (for annual crediting methods).
www.legacyannuities.com
Subscribe to Posts [Atom]