Your Retirement Paycheck Can Have Uncapped Potential

 

Dear Reader: Please find a special message from our sponsor, Crown Atlantic. Sponsorships like this allow us to continue our work to educate the American people on the important issues affecting our country. We appreciate your support. Reagan Reports for America Latest from Newsmax.com   Call Us Toll-Free: 855-386-4552 How Uncapped Fixed Indexed Annuities Work   As a responsible saver, you want to make the most of your hard-earned nest egg. As you prepare for retirement, you cannot help but notice that interest rates are near record lows. Investing in the stock market is an alternative to persistently low interest rates from a bank. Still, you might be concerned about whether the market will finally become a bear market after six years as a bull. Fixed indexed annuities are one option that may deliver better interest growth than a bank account, with less market risk than the stock market. Fixed indexed annuities credit interest in part based on changes to a market index1, such as the Standard & Poor's 500. So your annuity can be credited with interest when the index to which it is tied rises. At the same time, just like traditional fixed annuities, these annuities have a principal protection feature and guarantee a minimum interest rate2. All the while you are protected from market downturns and your money is not directly participating in the market or index. Editor's Note: Boost Your Retirement Income With This Easy Strategy Americans are snapping up fixed indexed annuities, according to Bloomberg. They purchased some $47 billion worth in 2014, up 21 percent from 2013's total. In particular, one type of fixed index annuity has been in the spotlight recently: the uncapped annuity. While you can come out ahead with uncapped fixed indexed annuities, it's important to understand how they work in order to make an informed decision on whether purchasing one of these contracts is right for your situation. How Uncapped Fixed Indexed Annuities Work Some fixed indexed annuities are capped. That means there is a maximum interest rate you can be credited in a given period. If the market index increases more than the cap, the company from which you purchased the annuity credits it with the cap rate. For example, if the market index increases by 2% more than your cap rate, you will receive an interest credit equal to your cap rate. This limit does not exist with uncapped fixed index annuities; the insurance company will use other methods (discussed below) to control the interest crediting. Are You Really Protected? One of the biggest drawbacks to investing in the stock market is the risk of losing your investment – and possibly seeing your retirement savings slip away. When you choose uncapped fixed indexed annuities for a portion of your retirement money in the hopes of getting increased interest over time, you may wonder whether you are still protected. You are, since fixed indexed annuities protect your premium — AND interest credited in previous years — from downturns in the market. Uncapped fixed indexed annuities offer extra interest crediting potential when the index does well, and you are guaranteed a minimum interest rate when the index heads south; the rate could be 0% but your principal is protected from market risk. 'Uncapped' Is Not 'Unlimited,' and Other Important Information on Uncapped Fixed Indexed Annuities One way companies can afford to offer uncapped fixed indexed annuities is to make sure "uncapped" does not mean "unlimited." Some ways carriers control the interest crediting without a cap include using a participation rate, spread/margin/asset fee, or a combination of indexed crediting methods. Here are some examples. 1. If your contract is controlled using a participation rate, your annuity will be credited interest based on the stated percentage your annuity is "participating" in any increases in the index. In other words although there is not a cap, you will receive a portion of the increase in the form of an interest credit but not all of the increase. 2. With the spread/margin or asset fee method, a rate is deducted off the top before interest is credited to the annuity. So after calculating the increase in the index, the insurance company would take its "spread" off the top, then credit the balance to the annuity. In years where the index is down, no deduction is taken from the principal. 3. Some annuity contracts will incorporate two controls to the interest crediting; for example, using a participation rate combined with a spread to calculate the interest to be credited. Editor's Note: Protect Yourself From Outliving Your Money Proceed with Caution   Uncapped fixed indexed annuities can be an attractive alternative to consider for a portion of your retirement money. The protection provided by the guarantees of a fixed indexed annuity, combined with the potential for higher interest crediting, has fueled record amounts of money being moved to these products. But it is important to realize that there is a cost to the protection and guarantees associated with your annuity. The insurance company will regulate the interest credited in some way during the up years. If you are speaking with an agent or adviser who mentions an uncapped crediting method, be sure to get the specifics on how spreads and participation rates could affect the contract. When you see the term "uncapped," know that you'll need to explore just how the insurance company will control the interest credited to your contract. The Bottom Line Uncapped fixed indexed annuities have tremendous potential. They can provide you protection and offer the possibility of higher interest rates than some other low-interest-rate financial instruments. Just as you should before making any major money decisions, do your research on what they are and how they work. That way, you can make a sound decision and have confidence in your retirement strategy. Give your future and your retirement the focus and attention it deserves. Put Crown Atlantic's national network of independent insurance professionals to work for you. Request a meeting with one of our representatives so they can help you find retirement solutions suitable for your needs. Click on the button below or contact us by going online to CrownAtlantic.com or calling 855-386-4552 to speak with a professional annuity agent today! Thank you,   Joe Stark Crown Atlantic   Get the Annuity Primer On Medicare? Learn More About Medicare Supplement Insurance     Crown Atlantic Insurance, LLC.   2200 NW Corporate Blvd., Suite 403 Boca Raton, FL 33431   ©2015 Crown Atlantic Insurance, LLC All rights reserved. 1A fixed indexed annuity is not a registered security or stock market investment and does not directly participate in any stock or equity investments, or index. The applicable index is a factor that in part determines the interest to be credited. 2Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company; they are not insured by the FDIC. Annuities are long-term insurance contracts designed for retirement. As a result there may be fees or penalties for early withdrawals, including surrender charges, and if taken prior to age 59 1/2, withdrawals may be subject to a 10% federal additional tax.   You received this Reagan Reports for America email because you subscribed to it or someone forwarded it to you. 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