Mendenhall Financial Group

Fixed Index Annuities

If you’re like most retirees or near-retirees, you want to protect your hard-earned savings from market volatility, inflation, and unexpected expenses. You also want to earn a reasonable rate of return on your investments without taking too much risk.

Fixed Index Annuities

That's where fixed index annuities (FIAs) come in. FIAs are insurance products that offer a combination of protection and growth potential. Here's how they work:

– You invest a lump sum or a series of payments into an FIA contract, which is issued by an insurance company.
– The insurance company credits your account with interest based on the performance of a stock market index, such as the S&P 500 or the Dow Jones Industrial Average.
– The interest rate is usually subject to a cap, a spread, or a participation rate, which limits the amount of upside potential but also protects you from downside risk.
– You can choose from various index options, allocation strategies, and riders that suit your goals, risk tolerance, and time horizon.

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– You can withdraw income or principal from the FIA contract, either in a lump sum or in periodic payments, depending on the terms and conditions of the contract.
– You can also pass on the FIA contract to your heirs, either as a lump sum or as a series of payments, depending on the tax and estate planning implications.

 

The key advantage of FIAs is that they offer a floor of protection against market losses. Unlike stocks, bonds, or mutual funds, which can lose value due to market downturns, FIAs guarantee that you won’t lose any principal or interest due to market downturns. This means that even if the stock market crashes, your FIA account value will stay the same or increase, depending on the index performance and the interest crediting method.

The other advantage of FIAs is that they offer a ceiling of growth potential. While you won’t get the full upside of the stock market, you can still benefit from the positive trends without risking your savings. The insurance company takes on the risk of investing your money in the stock market, and you get a share of the gains without any of the losses. This means that even if the stock market goes up and down, your FIA account value will increase over time, depending on the index performance and the interest crediting method.

At Mendenhall Financial Group, we believe that FIAs can be a valuable tool for retirement planning. We can help you evaluate your options, compare the features and costs of different FIA products, and design a customized strategy that fits your needs. We can also explain the risks and limitations of FIAs, such as surrender charges, fees, and liquidity constraints, and help you make an informed decision. Contact us today to learn more about how FIAs can protect your house and your portfolio.

At Mendenhall Financial Group, we can help you navigate the complex world of Medicare and find the right plan for you and your family. Our team of experts can provide personalized consultations, plan comparisons, and enrollment assistance to ensure that you have the coverage you need to stay healthy and happy.