An annuity is a contract between you and a life insurance company that says you will fund the annuity with a lump sum or multiple payments over the course of time. In return, the insurance company will pay you in a single or series of payments when you elect to start taking income.
It can be hard to find balance in today’s roller coaster stock market and it is important to diversify your retirement portfolio. Fixed Indexed Annuities can provide peace of mind and certainty, no matter what happens on Wall Street. Fixed Indexed Annuities were created in 1995. The insurance company that holds your account uses a stock market index as an indicator or benchmark for how much interest to credit your account, this can be done based on a monthly and/or annual average. This formula also provides a guaranteed minimum interest rate, which means the insurance company assumes any risk, instead of you, the contract holder. Once interest is credited, it can never be decreased due to stock market losses. Fixed Indexed Annuities are used, mainly to protect a nest egg and to yield guaranteed lifetime income during retirement.