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What are the differences between indexed and fixed annuities?

Now that you have heard about the opportunity to sell annuities now, you have done some research and discovered two types of annuities: fixed annuities or indexed annuities.

Both fixed annuities and indexed ones have surrender periods that are equal to their contract lengths. Many fixed annuities have surrender periods for three to ten years. There are many surrender terms for indexed annuities. The most common is ten years, but the longest period can be twelve to fifteen years.

Fixed Index Annuities explained

Fixed annuities can be a great option for senior citizens who aren’t willing to risk the unpredictability of the stock market, but still want higher rates than what their bank CDs offer. Because they are complex, indexed annuities can be more suitable for smart investors and younger clients who want to maximize their return without taking on too much risk. While an indexed annuity is a fantastic vehicle for clients looking to maximise their return, they are not suitable for all.

Americans are most concerned about not being able to save enough for retirement. However, there’s one product that is becoming more popular but it has yet to catch on.

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Fixed and fixed index annuities, unlike a variable one, are insurance products that protect retirement savings. Fixed products cannot be lost in a stock crash and are therefore not able to invest in stocks.

Fixed Index Annuities often offer a bonus for your premium deposit, which you can use to purchase an Annuity. You will see an increase in the Annuity’s value immediately after receiving this bonus payment.

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Fixed indexed annuities offer a guarantee of interest and additional returns in the event that the stock market does well. The downside is that there can be a higher surrender fee and complicated formulae for computing returns.

As an agent you must evaluate your client’s financial and knowledge needs. An indexed annuity may not be the best product for your client if they have never invested in stocks or the way it works. If your client is stock market-savvy and understands the product and your expectations regarding future earnings and potential charges, you should definitely consider an indexed annuity for building your retirement savings.