With equity index fixed value guaranteed growth annuities, if you hold this annuity through maturity, you are guaranteed some growth. Here your growth can be linked to the stock market and you only participate in upturns in the stock market, and never participate in the downturns of the stock market. Thus fixed value, equity indexed annuities have potential to grow significantly greater than other conservative vehicles. Even if the stock market does not go up any of the years, all through the maturity date, if properly structured, the owner is still guaranteed to have some growth at maturity (more than what the owner put into this annuity, hence the name fixed value guaranteed growth annuity). If the stock market is up in any given annual cycle, then at the end of that year, you would lock-in the applicable upside for that year’s growth (minus an annual spread, the spread only comes off any applicable gains ), then your principal, at your annual anniversary, would then be increased by that year’s applicable gains.
Holding a fixed value annuity through maturity, you are guaranteed some growth.
All applicable gains, once locked in at the annual anniversary, then become principle, and your principle is always protected from future stock market volatility or downturns. If in any year the stock market goes down, there would be no gains to lock in that year, but you would not lose any money. In a down stock market year, your principle remains the same. Your principle only participates in upturn years, you never participate in downturn years.
By being linked to the stock market, without directly being in the stock market, you can enjoy participating in stock market gains, but do not participate in any stock market losses: This annuity cannot lose money due to stock market volatility! With this type of annuity, your principle has downturn stock market protection and therefore, your retirement savings are recession proof. Also, an equity indexed annuity’s growth is linked to an equity index, such as the Standard and Poor’s 500, allowing for increased potential returns during strong markets and locking-in applicable gains on an annualized basis. In exchange for the insurance company agreement to absorb the losses in the down markets, the owner receives a share of the index annuity’s growth when markets are up (then the owner enjoys locking in applicable gains on an annual basis).
- Linked to stock market
- No stock market risk, No loses
- Lock-in applicable gains annually