The benefits of fixed index annuities in a bear market

A bear market occurs approximately every five years. The average decline is 39%, and the average duration is 18 months. This can be painful for the economy and investors. But the important thing to realize is that the bear market is also temporary. If you’re an investor, you may suffer losses, but you may also have an opportunity to accelerate your returns over longer periods and eventually make a profit. To break even, it typically takes just over five years.1

So, how can you help minimize any damage from a bear market? One answer is to consider a fixed indexed annuity (FIA), a product made for times like these. FIAs offer the opportunity for tax-deferred growth, and many give you the option to generate guaranteed, lifetime income within the same product while protecting your premium from market volatility. In other words, FIAs can be a very good option because they have upside potential, with no risk of losing premium due to market downturns. In the middle of a bear market, you’ll want stability as well as the opportunity for potential growth.

Pros of fixed index annuities

Fixed index annuities (FIA) can be a valuable planning vehicle for retirement savings. They offer protection from market downturns and guarantees that you expect along with growth opportunity to help build your retirement savings. They provide tax deferral, liquidity options, annuity payout options, full accumulation value at death, ability to avoid probate, and a fixed account option.

• Low risk - When stocks and other investments decline due to market volatility, FIA’s offer a unique opportunity to earn interest linked to the growth of various stock market indices without experiencing the downside risk. The interest credits for a fixed index annuity will not mirror the actual performance of the index itself, but rather the index closes are used as a basis for determining what the interest credits will be. Take a look below at where FIAs fit with other investment products in light of risk.
  

• Safety - An FIA’s ability to not lose premium due to market downturn is one of its most important benefits, especially when the market takes a downturn.
  

• Growth - FIAs are an insurance product that can help create a foundation of conservative growth, but they also work as a sound financial strategy to help guarantee you have a stream of income payments for as long as you live.
  

• Flexible use - Depending on your contract, you may be able to start receiving annuity payments within a year of purchasing an FIA, or you can defer the payments to a later date