Five things your annuity seller SHOULD tell you:
December 19, 2023 by Sheryl J. Moore
I believe you may misunderstand indexed annuities Mike Palmer.
Click HERE to view Five Things Your Annuity Seller Won’t Tell You via Kiplinger
What do you mean when you say indexed annuities “offer ‘point to point’ crediting, but the investor must choose monthly or annual valuation, and the fees for each option differ?”
The annuity purchaser doesn’t have to chose a monthly or annual valuation for annual point-to-point indexing methods.
Their interest is credited annually.
There are no buffers on indexed annuities; that feature is reserved for structured annuities (often referred to as RILAs).
You are quick to point out that consumers lose out on dividends with indexed annuities, as compared to investing in the index directly. However, you disregard how much annuity purchasers save, from not being subjected to the market’s losses, if they were directly invested in the market. That isn’t a fair comparison.
Death benefit riders are typically found on variable annuities; very few indexed annuities offer them. Why? Indexed annuities pay the beneficiaries the annuity’s full value at death, and their value cannot decline as a result of market performance.
And while you are quick to throw shade at Athene for their Performance Elite 15 annuity, you fail to realize that the reason that annuity has a 15-year surrender charge is because it carries a 15% premium bonus on it. That means that an annuity purchaser who buys this annuity with their $100,000 nest egg, will immediately have the annuity’s value increase to $115,000.
Let’s make sure we are being fair in our analysis of annuities, and don’t lose sight of the fact that these products are for risk transfer, not an equity alternative.
Five things your annuity seller SHOULD tell you:
1. Indexed annuities guarantee an income you cannot outlive;
2. Indexed annuities give you an opportunity to “beat the bank;”
3. Indexed annuities pay your beneficiaries the full value at death;
4. Indexed annuities give you limited opportunity to earn interest based on the market’s performance; and
5. Indexed annuities are rich in guarantees: minimum guaranteed surrender values, minimum caps/pars (maximum spreads), guaranteed income, and more.
Take note Kiplinger. -sjm