Index Annuity Pros And Cons

A risk of purchasing an FIA is a loss of buying power.

Index annuity pros and cons. Such riders which can include lifetime pay-out joint lifetime pay-out and minimum income guarantees appear to provide additional protection but in many cases their cost doesnt make them worth the benefit. Index Annuities Have No Contribution Limit Like Traditional IRAs. With all the benefits of less market risk there are a few drawbacks to owning a fixed index annuity.

Indexed annuities have characteristics of both fixed and variable annuities. As with any deferred annuity it allows you defer taxes until you pull the money out. The safety trade off is limited growth.

Index annuities involve complicated crediting methods. When an index annuity is part of a retirement plan its cons are outweighed by its minimum guaranteed rate and growth. Full protection of principal.

Index gains are permanently locked in when the index option expires. The investor would receive the capped rate of. Like all investments index annuities have their disadvantages.

Lets say theres a fixed index annuity with a 25 cap in place. Most of these are common to all retirement savings instruments including 401ks and IRAs but some are exclusive to annuities. Surrender periods are lengthy.

According to Haithcock the pros are. While an indexed annuity is technically a version of a fixed annuity it really combines the benefits of both fixed and variable products. On a basic agreement individuals would invest money into the annuity and then.