How to Make the Most of Growing Old With Indexed Annuities

Did you invest in indexed annuities a few years back? If you bought one seven years back, the maturity date could possibly be approaching fast, and you may only have a small time period to decide whether to renew the annuity or place your money somewhere else.

If you look at what has happened to indexed annuity interest rates and the markets since you bought your indexed annuity, you may understand why the specs for a new contract may differ. Annuity rates are at a four-decade low and the markets have swung quite a bit. Therefore, there's a good chance that you will see reduced market participation rates and lower maximums (lower caps) in amounts credited to your equity index annuities. In addition, you might need to make a longer-term commitment on your new contract.

The annuity company is in position to change participation as well as cap rates at the renewal date, whereas your initial contract may have kept exactly the same numbers throughout the term. Nevertheless, this could work to your benefit. Because if the equity markets become less erratic, there's the chance that index option rates will decrease, thus making it possible for annuity companies to offer higher annual participation ranges and caps on restored or newly issued indexed annuities (the less volatile the markets, the more the insurance companies can pay investors of indexed annuities as the insurer's hedging costs are reduced).

Markets have shifted and new indexed annuities might not be identical to one you bought before. Nevertheless, it is going to still provide the same potential for tax-deferred growth and the other features in that encouraged you to make your original purchase. May be most important is that fact that indexed annuities are fixed annuities and provide a guarantee of principal in volatile times.

Talk to an experienced agent to evaluate your current indexed annuities and evaluate it to the new one your annuity company offers. Ask the agent to see how it measures approximately other annuity companies' products. Pay specific attention to the surrender charge period and avoid getting locked into an inappropriate term on a new indexed annuity.

Note: There might be risks with indexed annuities that include, but aren't limited to, the fact that the give back is calculated at the end of the particular vesting period; often, the buyer cannot access cash prior to end of the vesting period with out restriction; if the index performs properly, low interest rates are irrelevant; every annuity is subject to fees and charges; as well as withdrawals may be subject to submit charges. These restrictions on performance and must be looked at when deciding to purchase, exchange or renew the annuity.