Index annuities have grown in popularity over the last few years due to tremendous volatility in the equity markets. In fact, it is estimated that there was an $11 trillion loss in the market value of peoples’ retirement accounts since the year 2000. Index annuities are fixed annuities that provide a peace of mind solution to people worried about today’s volatile markets. A benefit with index annuities is that you have the protection of your principal while you earn interest linked to upside market potential, without the potential for losses in down markets. Also, index annuities may lock in market-linked interest earnings yearly. These products can help people protect their retirement assets in virtually any market condition.

Should you need income from your index annuity, most products allow the annuity owner to take income immediately through systematic withdrawals. Index annuities can even provide guaranteed lifetime income so you can’t outlive your retirement assets. As with most traditional fixed annuities, index annuities provide ready access to your annuity’s cash value. Most annuity contracts offer 10% free withdrawals after the first year, so you can withdraw up to 10% of the accumulated value each year for your income needs without penalty or adjustment. Many index annuity products offer extra liquidity for health care confinement needs. For example, if you had to go into a skilled nursing home for an extended period of time, most companies offer higher access to your annuity values without any penalty or adjustment.

Index annuities are long-term savings products; they are for a specific term of normally 5-15 years. Remember, you can withdraw up to 10% each and every year from your index annuity without penalty or adjustment.

Here is an example of the earning potential of an index annuity compared to the actual S&P 500 index: