by admin | May 16, 2018 9:16 am
It is an insurance product that allows your savings to grow in a tax-deferred manner is called a fixed index annuity. Annuities are used in two phases: a withdrawal phase and an accumulation phase.
How Benjamin Creates A Customer-friendly Fixed Index Annuity
It is on a mission to transform the fixed index annuity by putting customers first at Benjamin. It is able to cut out the agents/brokers fees completely by distributing our fixed index annuity online which only means that there are no surrender charges because Benjamin isn’t paying 5% to 10% of your money to an agent. The annuity has also simplified by only having one feature which is the participation rate and having the term of the annuity match the term for the point-to-point calculation. If you pick a five-year term and are guaranteed a 79% participation in the S&P 500, this means that with hibenjamin, that guarantee extends for the return of the S&P 500 over those five years. Benjamin thinks that all these customer-friendly features along with a delightful digital experience will help more retirees to get the most from their savings.
Surrender Charges And The Liquidity
Not just fixed index annuities, most annuities have surrender charges for early withdrawal of funds. You’d be able to withdraw 10% of the money ($2,000) anytime without incurring any penalties if you sign up for a fixed index annuity with a 10-year term and put $20,000 into it. But if you decided to pull all your money from the annuity after a year, you’d have to pay a surrender charge and the surrender charge will depend on the annuity, terms, and number of other factors. The surrender charge that you pay helps in covering the insurance company’s compensation obligations. Click here to get more details.
Most indices that are used for crediting in fixed index annuities usually do not include the return of dividends. You will notice they are price indices if you closely examine common indexes such as the S&P 500 or the Dow Jones Industrial Average which means that they reflect the prices of the stocks within the index. Your return would likely be greater than the return of the S&P 500 Index over those 10 years if you were to actually buy all the stocks in the S&P Index and hold them for 10 years because some of the stocks in the index would pay dividends over the course of those years that will add to your returns. Your returns would likely be lower than if you bought a Dow Jones Industrial ETF or index fund even if a fixed index annuity gave you 100% participation in the Dow Jones Industrial Average Index, no spreads or caps.
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