Retirement Protection

A Fixed Indexed product allows a consumer to earn interest based on the performance of a stock market index such as S&P 500, Dow Jones, and Nasdaq.

This insurance-based, tax-deferred retirement plan means fixed index product owners can’t lose money due to stock market volatility or downturns. This means no matter your age an indexed product can help grow and protect your retirement

Unlike variable products, you cannot lose your money to stock or bond market volatility.

Fixed Index products are one of the safest 401k and IRA investments during a recession. Some consider it “retirement crash insurance”. A fixed index product offers the opportunity to earn interest based on the positive performance (movement) of a market index without the risk exposure and lock in every gain earned. This means 3 things:

• • Growing a 401k or IRA based on a positive movement of an index both in a bull market and a bear market
  • Keeping all the interest and never losing the gains
  • Tax-efficient investing by tax-deferral

• Anyone who is saving for retirement or preparing to go into retirement
•  Consumers looking to have a guaranteed fixed income.
•  Pre-retirees who have maxed out their 401(k) and IRA who are looking for growth while eliminating market risk to save.
• Investors who want to receive regular income in retirement for as long as they live.
•  New retirees who are looking for continued growth while providing regular income.

• Lock-In Gains: Fixed index product owners keep all of their interest earned and never lose those gains in the future due to a stock market crash. The technical term for this feature is called the Annual Reset.
• Positive Movement of a Market Index: Fixed index products measure a particular stock market index’s performance from one specific date to another, typically one or two years from each other. If there is a positive movement between the 2 dates, interest can be earned even in a BEAR market. The interest earned is based on the movement, not the daily value.
•  Negative Movement of a Market Index: If the stock market index’s movement is negative, the owner earns a “zero credit,” The value stays the same as the previous year (minus any fees).

Fixed index products earn interest based on the upward performance of a stock market index but are not stock market investments. Gains are limited by a cap, spread, or participation rate. The interest earned is locked in each reset period. Thus, fixed index products protect from stock market loss. Index products are long-term savings products with limited liquidity.

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Mutual funds are investment products whose value fluctuates based on the underlying securities. When investing in an individual stock through a mutual fund, the value of your share is tied directly to the combined returns of all of the fund’s underlying securities. Thus, an investor fully participates in both the gains and losses of the investment. Share can be bought and sold daily, with some limitations.

vs.

Variable product strength is the ability to make 100% of the upside potential from a subaccount which is excellent. However, the downfall of the variable product is the ability to lose 100% of the money from market volatility, which is the fixed index product’s strength.

Variable products do not lock in the annual interest accumulation like the fixed index product.

To put this in perspective, a variable product would need a return greater than both the loss and the fees combined to get back to the investment’s original value. For example, if the variable product had a 10% loss one year in addition to the 4% annual fee, the variable product would need a 14% return to break even and a 15% return to fully recover the following year.

Now imagine if the variable product losses continued to increase in a downturn, the time to recover would be even longer. When comparing a variable product with a fixed index product, compare the upside potential and the amount of time to recover from potential losses.

When you receive your fixed index products contract, carefully read through and review it. Be sure every feature is what you understood your retirement plan would be. For example, there are disclosures, statements of understanding, or a prospectus to understand better what you have invested in.

If you find yourself worried or feel that you haven’t purchased what you understood, there is always a free look period which gives you a set number of days (usually 10 to 30 days) to change your mind after you receive it. You can return the contract if you decide that you don’t want the product during the freelook period.

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