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40 Annuities Facts Your Clients Need To Know

Here’s a list of 45 helpful annuity facts you should know. 1. The majority of individuals are ignorant of annuities. 2. Most people who think they understand an annuity don’t. 3. The media’s ongoing dissemination of false information about annuities is the leading cause of the general public’s misunderstanding of annuities. 4. There have been annuities from 1700 to 1100 B.C. 5. Annuities protect against the risk of living too long, while life insurance protects against the chance of dying too soon. 6. Annuities are a vehicle for saving for retirement and ensuring that you will get a fixed income throughout retirement. 7. No matter how long you live, an annuity is the only financial product to ensure you’ll receive payments for the rest of your life. 8. Most annuities are provided with eligible capital, which has not yet been subject to tax. 9. The annuity’s guarantees are only as good as the insurance company’s capacity to pay claims. 10. To ensure thorough diligence with respect to the insurer’s ability to pay claims, an annuity buyer should feel confident in the financials and ratings of the insurance firm they do business with. 11. Standard and Poor’s and A.M. Best are the best companies that rate insurance companies. 12. One must ensure that an annuity not only fulfills their goals, objectives, and risk profile but is also appealing and suitable. 13. It’s highly unlikely that the salesperson who sells you mutual funds also offers fixed or indexed annuities. 14. It’s most likely that the salesperson who provides you with homeowner’s insurance does not also offer annuities. 15. Deferred annuities and immediate annuities are the two basic categories of annuities. 16. Deferred annuities let you postpone taking an income till you’ve racked up more money. 17. Fixed annuities typically have a minimum annual interest rate guarantee of 1%. 18. Immediate annuities let you start receiving income payments in the first year after buying the annuity. 19. Every deferred annuity gives the buyer the option of annuitization. 20. Annuitization enables a buyer of an annuity to convert all or a portion of the contract’s cash-accumulation period into a period of periodic payments. 21. Annuity payments work in a manner akin to instant annuities. 22. The majority of businesses provide a variety of annuitization and immediate annuity choices. 23. Should the annuity buyer pass away, several income options let the surviving spouse continue receiving income payments. 24. Fixed and variable annuities are the two sorts of annuities. 25. Traditional fixed and indexed fixed annuities are two subtypes of fixed annuities. 26. Variable annuities are investments, whereas fixed and indexed annuities are insurance products. 27. Fixed annuities are generally better suited to people with conservative financial habits. 28. People who are risk-takers are better suited for variable annuities. 29. Indexed annuities generally are better suited to people with intermediate financial situations. 30. You cannot lose money as a result of market performance with fixed and indexed annuities 31. The insurance firm declares a stated interest rate for fixed annuities. 32. Indexed annuities only pay out a small amount of interest dependent on the performance of an index of stock prices. 33. The S&P 500 Index is the most popular stock market index used as a benchmark for indexed interest on indexed annuities. 34. Indexed annuities typically use a participation rate, cap rate, or spread rate to limit the amount of indexed interest generated. 35. The insurance firm purchases an instrument known as an “option” to offer index-linked interest on indexed annuities. 36. Even though the product is advertised as “uncapped,” interest on indexed annuities is ALWAYS subject to some kind of cap. 37. Buyers of variable annuities can invest directly in stock market indexes, mutual funds, etc. 38. The potential for interest earnings on variable annuities is boundless, but the risk for losses is equally as significant. 39. Variable annuities are sold via a “prospectus,” whereas fixed and indexed annuities are issued via an “annuity contract.” 40. Variable annuities were not created until 1952, despite the fact that fixed annuities have been around for centuries. 41. Indexed annuities have only been around for 20 years, whereas variable annuities have been around for more than 60 years. 42. Indexed annuities do not compete with variable annuities. 43. Annuity salespeople profit from annuities thanks to a commission the manufacturer pays them. 44. Indexed annuities are designed to earn 1 to 2 percentage points more than fixed annuity earnings. 45. Bond rates and market turbulence also influence indexed annuity rates.

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