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Experience the Power of Fixed Index Annuities The “Yellow Pad” Presentation.

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Presentation on theme: "Experience the Power of Fixed Index Annuities The “Yellow Pad” Presentation."— Presentation transcript:

1 Experience the Power of Fixed Index Annuities The “Yellow Pad” Presentation

2 Consider the advantages of a Fixed Index Annuity Returns linked to an index Return of principal* Liquidity features Tax deferred growth Safety * Subject to claims paying ability of issuing institution

3 The Strength of Tax Deferral Earnings accumulate tax deferred No income taxes are due until proceeds are taken out AND the Power of Triple Compounding Earn interest on your principal Earn interest on the interest Earn interest on the money you would have paid in taxes

4 Help Protect Yourself If you don’t have the recovery time that may be necessary, a Fixed Indexed Annuity may make sense for a portion of your money If you lost this much It could take this long to rebuild your nest egg assuming these potential annual returns at a 3% returnat a 6% returnat a 8% return 10%3.6 years1.8 years1.3 years 20%7.5 years3.7 years2.9 years 30%12 years6 years4.6 years 40%17 years8.6 years6.6 years 50%23.2 years11.6 years9 years With the safety and growth potential of a Fixed Index Annuity

5 Popular Indices (examples of companies in the index) STANDARD & POOR’S 500 NASDAQ 100DOW JONES American ExpressCisco SystemsHome Depot Anhueser-BuschDell Inc.Honeywell Coca ColaIntelGeneral Electric eBay Inc.MicrosoftMcDonalds Walt DisneyAmazon.comWal-mart 3M CompanyExpediaDu Pont Whirlpool CorpCephalon, Inc. S&P 500® is a trademark of the McGraw- Hill Companies. Index annuities are not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of purchasing index annuities The Nasdaq-100® is a trademark of The Nasdaq Stock Market, Inc. (which with its affiliates are the Corporations) the product (s) have not been passed on by the corporations as to their legality or suitability. The product (s) are not issued, endorsed, sold, or promoted by the corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT (S). Dow Jones is a service mark of Do Jones & Company, Inc. Investment products based on Dow Jones indexes are not sponsored endorsed sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of investing in such product (s). Inclusion of a company in the Dow Jones indexes does not in any way reflect an opinion of Dow Jones on the investment merits of the company.

6 Measuring the Gain Two common methods used Annual Point-to-Point – Annual Reset Monthly Point-to-Point – Annual Reset

7 Annual Point-to-Point Examples: Beginning index value: 1000 Ending index value on contract anniversary: 1117 Percentage of change: % Annual Cap: 4% X Your Return is 4% Beginning index value: 1000 Ending index value on contract anniversary: 900 Percentage of change: -10% Annual Cap: 4% X Your Return is 0% Up Year Down Year The annual cap varies depending upon the issuing insurance company. The 4% annual cap quoted is for illustrative purposes only.

8 Monthly Average Point-to-Point Examples: On each monthly anniversary the index gain or loss percentage is calculated from the previous monthly anniversary index number. Percentage gains are recorded up to the cap, percentage losses are not recorded. At the policy anniversary, the recorded changes are averaged together, and if positive, that is the interest credit for the year. If negative, there is not interest credited for the year. Up Year – assumed monthly cap is 4% Month Monthly index change (%) Monthly cap (%) Capped monthly change (%) Down Year – assumed monthly cap is 3% Month Monthly index change (%) Monthly cap (%) Capped monthly change (%) X Your return is 2.42% X Your return is 0.78%

9 Monthly Sum Point-to-Point Examples: On each monthly anniversary the index gain or loss percentage is calculated from the previous monthly anniversary index number. Percentage gains are recorded up to the cap, percentage losses are recorded with no cap. At the policy anniversary, the recorded changes are added together, and if positive, that is the interest credit for the year. If negative, there is not interest credited for the year. Up Year – assumed monthly cap is 2.5% Month Monthly index change (%) Monthly cap (%) Capped monthly change (%) Down Year – assumed monthly cap is 3% Month Monthly index change (%) Monthly cap (%) Capped monthly change (%) X Your return is 8.5% X Your return is 0%

10 The Power of Annual Reset You may reduce your risk during the down years! $100,000 PAYMENT Market Fluctuation S&P 500 Index Fund Fixed Index Annuity VALUE$100,000 Year 126.7%$126,700$108,000 Year 219.5%$151,407$116,640 Year $132,178$116,640 Year %$118,300$116,640 Year %$90,618$116,640 Year 626.4%$114,451$125,971 Year 79.0%$124,850$136,049 Year 84.7%$130,718$142,443 Year 911.6%$145,881$153, % Participation Rate 8% Cap No Fee Participation rate is defined as how much of the increase in the index will be used to calculate the index-linked interest. Annual Reset is defined as the index-linked interest, if any, is determined each year by comparing the index value at the end of the contract with the index value at the start of the contract year. Interest is added to your annuity each year during the term. The annual cap varies depending upon the issuing insurance company. The 8% annual cap quoted is for illustrative purposes only. Annual Point-to-Point -Annual Reset

11 The Power of Annual Reset You may reduce your risk during the down years! $100,000 PAYMENT Market Fluctuation S&P 500 Index Fund Fixed Index Annuity VALUE$100,000 Year 126.7%$126,700$109,184 Year 219.5%$151,407$117,141 Year $132,178$117,141 Year %$118,300$117,141 Year %$90,618$117,141 Year 626.4%$114,451$134,059 Year 79.0%$124,850$143,005 Year 84.7%$130,718$143,005 Year 911.6%$145,881$159, % Participation Rate 2.45% Monthly Cap No Fee Participation rate is defined as how much of the increase in the index will be used to calculate the index-linked interest. Annual Reset is defined as the index-linked interest, if any, is determined each year by comparing the index value at the end of the contract with the index value at the start of the contract year. Interest is added to your annuity each year during the term. The monthly cap varies depending upon the issuing insurance company. The 2.45% monthly cap quoted is for illustrative purposes only. Monthly Point-to-Point -Annual Reset

12 The Safety of Fixed Indexed Annuities All fixed annuities are backed by the claims paying ability of the insurance company offering them. The insurance companies are subject to strict guidelines established by the National Association of Insurance Commissioners and must strive to conservatively invest the premium funds to provide a minimum return. Additionally individual states may require insurance companies doing business in their state to contribute to the Life and Health Guarantee Association, which may help should an insurance company fail to meet the obligations of their contract holders, up to the guidelines published by the state.


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