Average Index Annuity Beats CDs By 70% over Five Year Period

Advantage Compendium Ltd completed its 5-year Index Annuity Return Summary where by carriers are asked to send copies of actual customer statements, with the personal data blacked out, for the five-year period commencing at the end of September 2000 and concluding at the end of September 2005.  In all, return data was obtained from over 80% of active carriers.

The study found the average index annuity return was 70% higher than the average CD for the five-year period ending September 2005.  During this difficult 5-year time frame Fixed Index Annuities allowed for tax-deferred growth coupled with competitive returns compared to other savings or investment vehicles.

According to Cindy Reed, Chief Marketing Officer for Midland National stated:  “We have found it beneficial to provide clients with multiple options and the flexibility to change these options on an annual basis.  Couple this with the insurance guarantees and benefits of a fixed index annuity and very strong renewal rate integrity as key factors to providing clients with long-term growth potential.”

Annuity Investment for Retirement

Annuity is an insurance product that can guarantee you will receive amount of money regularly until the end of the contract. Why should you consider annuity investment for your retirement?

Annuities are an insurance product that offers insurance benefits such as death benefit payment, and protection of your investment to beneficiary. An annuity as an investment offers investment benefits such as income protection for life, relatively higher interest rate than a CD or money market and tax deferred benefits. Insurance companies use your annuity to invest in bonds and treasuries.

Fixed annuity can guarantee a minimum annuity payment. While fixed annuity enemy is inflation, there is fixed annuity that will protect your investment against inflation.  Besides offering a fixed interest rate, an indexed annuity earns interest based on returns as Standard & Poor’s 500 Composite Stock Price Index (the S&P 500, NASDAQ and other indexes).

A variable annuity is a different type of annuity. Variable annuity can only be sold by prospectuses, are invested in mutual funds, and your investment is not guaranteed.  Its value may increase and decrease depending on the performance of your investment option and stock marketing returns.  And Index Annuity cannot lose its value based on the index’s return, regardless of what the index does.

You can invest in an index annuity in your IRA, Roth IRA, SEP, SIMPLE and can be rolled from a 401K, pension plan, IRA or other qualified plan.

An Index Annuity can be used to diversify with your stocks, mutual funds and other non-qualified plans.  One great advantage is the tax deferral that is gains are not taxed until taken out.  And it is also a consideration when you are collecting Social Security Payments, as they are not considered income unlike mutual funds, until you are receiving distribution.

An annuity should be considered as part of your retirement plan.  It diversifies your portfolio and can be used as a guaranteed lifetime income and has many benefits not available in other investments.

Related articles by Zemanta

• Invest $900k in a variable annuity? (cnn.com)

Related posts:

1. How to Guarantee Your Lifetime Income – Retirement Income
2. Index Mutual Funds as an Investment Strategy
3. How To Increase Your Yield by 45% With Tax-Deferred Annuities