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These products typically allow you to benefit from the unlimited upside of being 100% invested in the stock market. Unlike Equity Indexed Annuities, there are no upside caps. At the same time they offer a guaranteed interest rate floor towards your “living benefit.” If you decide to take advantage of these “living benefits,” you can guarantee yourself an annual interest rate, or floor, which is typically in the 5-7% compounded range, regardless of how the market performs. The living benefit is simply a feature that will provide guaranteed growth now and will provide guaranteed income for life in the future. For those of you already in retirement, the living benefit can be structured to start receiving a guaranteed lifetime income NOW, while your funds can still enjoy the unlimited upside of the market.
In addition, the “death benefit” on these products can also be structured to guarantee you an annual interest rate in the 5-7% compounded range, regardless of how the market performs.
There are multiple other features with these products that can greatly enhance your income/wealth in the future, such as a quarterly ratchet where you can lock in “high-water-marks.” For example, if the market were to rise sharply and then have a correction, your benefit could be locked-in based on the older higher value.
With baby boomers approaching or reaching retirement age and boomers and their parents living longer in retirement than any other generation in history, these new annuity products can have a place in one’s overall strategy. Use resources such as DirectAnnuities.com to stay up-to-date with developments and changing products to become a savvy consumer in order to meet your future financial needs. By Mike Ross, CFS, Registered Investment Advisor of The Wealth Enhancement Group, Inc.
If you are interested in learning more about these “Hybrid Annuity” options, please click here. |
