Fixed Index Annuity??

[Jakel]

I am recently retired and out of the stock market, and am being presented with an opportunity to invest in a FIXED INDEX ANNUITY, with a Guaranteed Living Benefit Rider. The agent is reccomending linking the returns to the S&P 500 Index. This is a 14 year commitment with an initial 10% immediate increase, and then linked to the index, but it cannot lose any principal, only gain. On the income side, they guarantee to calculate the income based on an 8% return each year, and I can decide when to start the annual payment. The longer I wait to sart the payments, the more I would get annually, and this is guaranteed until I , and my wife pass. I am 58, wife is 57, both in good health. He feels my income is adequate enough to invest in this fund,(don't think he really knows my wife) and it would not take all of my reserves. I can remove up to 10% of the money out annually, but it will reduce the income. Taking more than 10% kicks in peanalties that would be substantial. The fixed , guaranteed income sounds neat, but being tied into something for 14 years is a little discomforting.

The money is in a 5% fund presently, but that % changes annually, and I expect it to go down Jan 1. I figured some of you reading this have sold these products, some of you own them, and some of you may have better suggestions. I am not doing anything until I educate myself better on these matters, so I hope you will offer an opinion. Also, his commission does not come out of my funds, but is paid by the Ins. Co. but I am curious....what is the commision app. on say 100K. Just assessing the profit motive. Thanks

[GatorFan]

I have a two savers index annunities with Lincoln Benefit and earned average of 6% last year. NO gimmicks. If you want my agents name, IM me and I will send to you so you can get a true comparison to above.

[batman911]

Jakel,

Do yourself a huge favor and get a second opinion from a trusted financial advisor or a lawyer. Remember, the agents prime objective is to make money for himself and his employer.

[2 Oldcrabs]

The agent's commission is 8-10% on annunities. If you google "Annunity rip off" or "Annunity complaint" you will see the many problems with these investments. They are only as good as the insurance company. A lot of money is flowing into them. Not all are bad investments. Do your research and check with your insurance commission to make sure the agent is authorized to sell this investment and see if there are any complaints about the agent or the product.

[getdul981]

We were presented with a similar "opportunity" several years ago and we talked to our financial advisor about it. He told us that he could offer the same thing, but advised agains it.

It all boils down to the old saying that if it sounds too good to be true, then it probably isn't.

[KayakerNC]

Bryan J. Anderson explains some of the pitfalls of Variable Annuities With Guaranteed Lifetime Withdrawal Benefits, Or GLWB.

http://ezinearticles.com/?Variable-Annuities-With-Guaranteed-Lifetime-Withdrawal-Benefits,-Or-GLWB&id=2486507

[rjm1cc]

If you are talking about a lot of money I would look for a fee only financial advisor who knows annuities to review it. Sounds too good to be true.
I would also ask for a copy of all documents and read them. Then ask the sales person to explain the workding that is confusing. Remember the insurance compnay has to be able to earn enough to pay you plus their adminsitrative costs. Get quotes from a few different sources. Be sure you understnad what happens with inflation.

[l2ridehd]

The biggest issue with all annuities is your last in line. You hand over a bunch of money, then the agent gets their commission for selling it, then the insurance company gets its piece of the action which is profit and back office costs, then they put what is left over to work for you. That takes a long time to recover all those expenses before you have a positive position. There are many other better ways to invest your money. Find a good for fee money manger and have them go to work for you.