Are Fixed Indexed Annuities Trending Again for 2020?
November 26, 2019 by Robert Bloink and William H. Byrnes
All signs point to the possibility that fixed indexed annuities may once again be poised to become the hottest product in guaranteed lifetime income planning.
In general, fixed indexed annuities provide protection against loss of principal while pegging growth to a major index, such as the S&P 500. Clients tend to like the idea of participating in market gains while also protecting their principal and locking in a stream of income during retirement. However, indexed annuity sales have faltered in recent years due to the attention the DOL and other regulatory bodies have given to these products, which have historically been sold on a commission basis.
With the demise of the old DOL fiduciary rule and other emerging rules, however, it looks like fixed indexed annuities might be making a comeback—meaning that advisors may once again find themselves fielding questions about new developments in this product area.
Fixed Indexed Annuity Trend: Need to Know Product Information
Unlike directly investing in the equity markets, fixed indexed annuities offer principal protection in exchange for limitations on the potential for investment gains. However simple that initially sounds, these products usually contain complex features that the client will have to evaluate. When purchasing the annuity, one of the most important choices for the client is the interest crediting method, which essentially determines the way interest is credited to the account value.