How do I know a Fixed Indexed Annuity is safe?
A Fixed Indexed Annuity is a contract between you and the insurance company that issues your policy. Fixed Indexed Annuities are carefully monitored and highly regulated by the issuing state’s Department of Insurance. The annuity is additionally protected by the financial strength of the insurance carrier. Each state’s insurance regulator maintains jurisdiction over the insurance carrier and determines the specific amount and level of protection to which the individual investor is entitled.

Someone told me that my annuity has fees? Is this true?
Current advisors will tell you that all annuities have fees. Variable annuities have fees that average 2.5% or higher per year, but Fixed Indexed Annuities do not have any management or contract administration fees that are separately billed. The primary cost to a fixed annuity is committing the money for a period of time and accepting the maximum growth rate that is offered by the insurance company that is selling it. The insurance company pays advisors a commission which does not come from the client’s money; the commission is paid from the earnings of the insurance company. As long as you do not select an income rider or take withdrawals in excess of the penalty-free withdrawal amount, your annuity fees are built in the net growth rate that you’re receiving.

Where can I learn more about Fixed Indexed Annuities?
To learn more about Fixed Indexed Annuities we strongly encourage you to visit the website of the National Association for Fixed Annuities (NAFA) at www.nafa.com.

What is a Fixed Indexed Annuity?
A Fixed Indexed Annuity (FIA) is a fixed annuity that provides an income and interest rate while preserving and protecting your investment premium. You do not pay taxes on your premium or interest until you take withdrawals or receive income. Unlike traditional fixed annuities, additional interest may be earned based on positive changes in commonly used financial indices such as the S&P 500 or the Dow Jones Industrial Average.

Can I liquidate my annuity?
There are many options available for withdrawing your money depending on the specific annuity. In the event of premature death, your beneficiaries have multiple payout options such as receiving an annuity’s accumulated value as a monthly or lump sum payment.

Are there rate caps that limit the gains I can make on my investment?
Unlike most other investment tools, fixed index annuities are designed to provide an increased level of protection against prolonged market downturns. Although the rate of growth is limited, your principal and subsequent market gains are not at risk of loss due to bear markets or weak economic conditions. If the index that your annuity is based on performs well, you will receive a percentage of that growth. Should the market experience a downturn, your principal and interest earned are covered up to a percentage or in full. Gains are permanently credited to your annuity.

Aren’t there other investments with unlimited growth potential?
Yes, there are; however, most of these options carry the corresponding potential for unlimited loss. Also, fixed indexed annuities have the potential to earn more interest than traditional fixed annuities and other safe money alternatives.

How do I know if a Fixed Indexed Annuity is for me?
It’s important to note, there isn’t a perfect investment tool. It is our belief that investors should be safer with their money as they grow older. Many of our clients want to preserve and protect their assets.

If you want unlimited growth potential and are willing to assume the risk of loss, then a fixed indexed annuity is probably not right for you. If you are concerned about protecting your principal and enjoying a reasonable rate of return on your investments, then you may consider it. To evaluate your options call Rochester Investments at 585-466-8119 and see what investment options are the best strategy for you.

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