Upload
robyn-summersett
View
217
Download
1
Embed Size (px)
Citation preview
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
The Strength of Tax Deferral
Earnings accumulate tax deferred No income taxes are due until
proceeds are taken outAND 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
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 lostthis much
It could take this long to rebuild yournest egg assuming these potential annual returns
at a 3% return at a 6% return at a 8% return
10% 3.6 years 1.8 years 1.3 years
20% 7.5 years 3.7 years 2.9 years
30% 12 years 6 years 4.6 years
40% 17 years 8.6 years 6.6 years
50% 23.2 years 11.6 years 9 years
With the safety and growthpotential of a Fixed Index Annuity
Popular Indices(examples of companies in the index)
STANDARD & POOR’S 500
NASDAQ 100 DOW JONES
American Express Cisco Systems Home Depot
Anhueser-Busch Dell Inc. Honeywell
Coca Cola Intel General Electric
eBay Inc. Microsoft McDonalds
Walt Disney Amazon.com Wal-mart
3M Company Expedia Du Pont
Whirlpool Corp Cephalon, 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.
Measuring the Gain
Two common methods used
Annual Point-to-Point – Annual Reset
Monthly Point-to-Point – Annual Reset
Annual Point-to-PointExamples:
Beginning index value: 1000
Ending index value on contract anniversary: 1117
Percentage of change: +11.70%
Annual Cap: 4%
X Your Return is 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.
Monthly Average Point-to-PointExamples:
On each monthly anniversary the index gain or loss percentage is calculated from the previous monthly anniversary indexnumber. 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 1 2 3 4 5 6 7 8 9 10 11
12
Monthly index change (%)
2.3 -1.6 3.2 -2.3 3.4 5.1 3.8 4.3 2.4 1.9 -1 4.2
Monthly cap (%) 4 4 4 4 4 4 4 4 4 4 4 4
Capped monthly change (%)
2.3 0 3.2 0 3.4 4 3.8 4 2.4 1.9 0 4
Down Year – assumed monthly cap is 3%
Month 1 2 3 4 5 6 7 8 9 10 11 12
Monthly index change (%)
2 -5.1 1 -3.2 -4 -1.2 4 1 0 -2.2 -5 1.3
Monthly cap (%) 4 4 4 4 4 4 4 4 4 4 4 4
Capped monthly change (%)
2 0 1 0 0 0 4 1 0 0 0 1.3
X Your return is 2.42%
X Your return is 0.78%
Monthly Sum Point-to-PointExamples:
On each monthly anniversary the index gain or loss percentage is calculated from the previous monthly anniversary indexnumber. 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 1 2 3 4 5 6 7 8 9 10 11
12
Monthly index change (%)
2.3 1.6 -3.2 -2.3 0.4 2.1 3.8 -3.3 2.4 1.9 -1 4.2
Monthly cap (%) 3 3 3 3 3 3 3 3 3 3 3 3
Capped monthly change (%)
2.3 1.6 -3.2 -2.3 0.4 2.1 3 -3.3 2.4 1.9 -1 3
Down Year – assumed monthly cap is 3%
Month 1 2 3 4 5 6 7 8 9 10 11 12
Monthly index change (%)
2 -5.1 1 -3.2 -4 -1.2 4 1 0 -2.2 -5 1.3
Monthly cap (%) 3 3 3 3 3 3 3 3 3 3 3 3
Capped monthly change (%)
2 -5.1 1 -3.2 -4 -1.2 3 1 0 -2.2 -5 1.3
X Your return is 8.5%
X Your return is 0%
The Power of Annual ResetYou may reduce your risk during the down years!
$100,000 PAYMENT
MarketFluctuatio
n
S&P 500Index Fund
Fixed IndexAnnuity
VALUE $100,000 $100,000
Year 1 26.7% $126,700 $108,000
Year 2 19.5% $151,407 $116,640
Year 3 -12.7 $132,178 $116,640
Year 4 -10.5% $118,300 $116,640
Year 5 -23.4% $90,618 $116,640
Year 6 26.4% $114,451 $125,971
Year 7 9.0% $124,850 $136,049
Year 8 4.7% $130,718 $142,443
Year 9 11.6% $145,881 $153,839100% Participation Rate 8% Cap No Fee
Participation rate is defined ashow 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
The Power of Annual ResetYou may reduce your risk during the down years!
$100,000 PAYMENT
MarketFluctuatio
n
S&P 500Index Fund
Fixed IndexAnnuity
VALUE $100,000 $100,000
Year 1 26.7% $126,700 $109,184
Year 2 19.5% $151,407 $117,141
Year 3 -12.7 $132,178 $117,141
Year 4 -10.5% $118,300 $117,141
Year 5 -23.4% $90,618 $117,141
Year 6 26.4% $114,451 $134,059
Year 7 9.0% $124,850 $143,005
Year 8 4.7% $130,718 $143,005
Year 9 11.6% $145,881 $159,312100% Participation Rate 2.45% Monthly Cap No Fee
Participation rate is defined ashow 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
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.