50+ Lifestyles

Protection. Without all the drama.

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

Our financial practice focuses on the use of fixed and fixed-index annuities due to their safety from stock and mutual fund market downturns.

What a roller coaster ride with the stock and mutual fund markets over these past 2 years and especially this last month! Our clients – following our annuity strategies – have not lost money due to market volatility. That’s because fixed index annuities are insurance products, so they are protected from losing principal as a result of market downturns. It may sound simple. Even a bit dull. But in this economy, that’s a good thing.

Annuities are contracts between you and an insurance company. You pay premiums in a lump sum or periodically, and the issuer promises to pay you some amount in the future. With an Index Annuity the interest earnings are tied to the performance of an equity index. The insurance company may also provide a minimum guaranteed interest rate. With an Index Annuity interest earnings may increase if market performs well – but if the market performs poorly, you do not lose value. Note however that any return, with the Index Annuity, as with all annuities, is only as good as the insurance company that offers it. Both guaranteed principal and earnings are entirely dependent on the insurer’s ability to meet its financial obligations.

Our financial practice focuses on the use of fixed and fixed-index annuities due to their safety from stock and mutual fund market downturns. The ad on this page asks the question – “Are you looking for some relief from all the drama associated with market volatility?” Since October 2010, there has been considerable drama – too much drama – from retirees or working persons nearing retirement due to the terrific losses taken with those market downturns. You don’t need that drama! You don’t need that additional worry.

We believe that an individual or couple, either retired or soon to be retired should not be at risk with valued retirement money. We believe annuity products offer guarantees that take away that risk. We encourage our clients to look into annuity portfolios to take advantage of those
guarantees while allowing the potential for growth.

Over the past five years beginning May 2005 to May 2010, the fixed index annuity we often use and mentioned in the below ad is linked to the performance of the S&P 500 and has actually gained over 24% – slightly under 5% annually. Once gain has been added to the account value, then that gain is not subject to loss.

This type of annuity or annuities combined with an immediate annuity is the portfolio we often create to manage and protect assets safely. Further – when this arrangement is set up as a “split annuity” lifetime income without risk of depletion of principal is established.

I believe annuities have advantages but remember there are also disadvantages to annuities. Additional questions you should ask if
considering an annuity include:

• What is the minimum guaranteed interest rate?
• What is the participation rate?
• What is the indexing method? How does it work?
• Is there an interest cap?
• Is there an asset fee or spread or margin? Is it in addition to or instead of a participation rate?
• What are the holding period or surrender charges?
• What are the penalties for partial withdrawals?

We encourage you to look into annuity portfolios to safely manage and safely protect your valued retirement money. We welcome the opportunity to determine the appropriateness of the annuity or an annuity portfolio for your situation. Call on us anytime.

Dick Schillig
563.332.2200