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What is an Annuity?

An annuity is an insurance product that pays out income, and can be used as part of a retirement strategy. Annuities are a popular choice for those who want to receive a steady income stream in retirement. We recommend Fixed Annuities to our clients so that your money is guaranteed to grow without the risks associated with the markets.

Buying Fixed Annuities 


We have seen a huge flight to safety into Indexed Annuities with the recent 30%+ correction in equities, 25-year interest rate highs, geopolitical war risks, supply chain woes, and 40-year high inflation with the necessities of life. Stock market losses hurt more than market gains help. In markets like we’re experiencing right now, your clients would need a return greater than the loss to get back to the investment’s original value. That means if a 10% loss is followed by a 10% gain, you still carry a loss. You would need an 11% return to fully recover. As losses increase, your money needs to work even harder — just to break even. Consider a strategy built to protect your clients’ portfolios from continuing market declines, and provide income for life.

With indexed annuities from Elkin Insurance, you have crediting strategies designed to provide 100% downside protection to give your clients peace of mind and offer market upside returns to keep pace with this record inflation that lock gains in every year that can never be lost. Because you’re safeguarded from market losses, even small gains will keep your client’s money growing and working toward their income goals.

Reasons for Buying Fixed Annuities


Annuities can provide an incredible safety net. Older investors are particularly drawn to annuities as the threat of outliving their money from retirement accounts is a significant risk. Annuities can provide a guaranteed income stream for life, along with guarantee of principal. Think of the annuity like building your financial future upon a solid unmovable rock foundation.


In the past, people believed that annuities were for only wealthy individuals or families with a need to either shelter assets or ensure that large amounts of income would be guaranteed. But, alas, insurance companies are successfully marketing annuity products to middle and lower class families who also need to ensure that income continues in retirement. This is especially true as life expectancy for both men and women has increased dramatically of the last 40 years. Annuities are really the only investments that provide options for guaranteed income, a guaranteed return or a guarantee of the Principal.

There are several variations and countless products to choose from, however they all share these common traits:


  • Tax Deferred Growth: The taxes on the growth of an annuity are deferred. This in essence gives you a better rate of return than some other investment products, because the income that you would have paid in taxes is still working for you.

  • Principal Guarantees: The safety offered with fixed annuities is perhaps the most important feature to most consumers. As long as you follow the contract rules, and the insurance company remains in good standing, the fund put into an annuity are never at risk.

  • Fixed, Competitive Interest Rates: Typically speaking, fixed annuities usually offer a higher interest rate than similar products, such as a bank CD or a money market account.

Types of Fixed Annuities:

Traditional Fixed Annuity

The traditional fixed annuity is structured very similarly to a bank CD (certificate of deposit). The premium grows at a guaranteed fixed interest rate for a set amount of time. The length of the contract can range anywhere from one year, to as long as 15 years.


Fixed Indexed Annuities / Equity Indexed Annuities

Fixed Indexed Annuities, also referred to as Equity Indexed Annuities, provide the same principal guarantees of a traditional fixed annuity, however the rate of return is based on the performance of an index, such as the S&P 500. The insurance company will credit the account with a portion of the indexes upside growth, while offering protection against downturns in the market.



Immediate Annuities convert a lump sum amount of money into guaranteed income to the annuitant as soon as the annuity is purchased. The annuitant may choose from a lifetime income stream, which provided the income for life, or a set time frame (usually 5, 10 or 20 years).

How Fixed Indexed Annuities Work:

  1. You invest money into an indexed annuity with an insurance company.

  2. The insurance company invests your money into a pool of safe assets. Interest earnings from those investments are used to purchase an option on a market index

  3. After one year, if the index is positive, the insurance company credits your account with a portion of the index’s gains, up to a certain limit.

  4. Several different index options are available in every contract, are chosen upon at issue, and can be changed at each contract anniversary.

  5. Each contract allows a portion of the money to be withdrawn every year without penalty. Distributions from the contract in excess of this amount will face a surrender penalty.

Additional Riders and Benefits – Where Fees are Found

Various optional riders can be added to fixed indexed annuities that provide one or more additional retirement benefits. Each contract may have a single additional option or a combination of the below. All are mostly responsible for any fee you might see on a fixed indexed annuity.

Guaranteed Lifetime Income

This is the most common benefit and one of the main reasons why people buy fixed indexed annuities. Regardless of account performance, you can receive a guaranteed income payout for life, either starting immediately or deferred for a number of years. 

Each year of deferral increases the payout you can expect so it can be purchased well ahead of retirement. Contracts are available with or without fees for guaranteed lifetime income, allowing the purchaser to customize the retirement income plan. 

Long Term Care Enhancements

Usually available with a guaranteed lifetime income rider, the long term care enhancement offers an increased income payout if you need long term care assistance. Enhanced payouts are typically available for three to five years and when completed, income payments revert to the initial guaranteed income amount.

Guaranteed Death Benefit

With all fixed-indexed annuities, the death benefit equals the accumulated value of the contract. An enhanced death benefit offers a guaranteed annual increase to the death benefit each year, regardless of account performance.

Return of Premium

This rider gives the contract owner the option to exit the contract early without paying surrender penalties. In most cases, the ROP is available after the fourth contract year.

Enhanced Performance

Each contract has a list of index options available for allocation of the premium. In addition, many contracts offer much higher growth potential on each of the index options, for an additional fee. The choice to use enhanced growth potential is left to the contract owner and can be changed at each contract anniversary.


  • Fixed index annuities are a type of investment product offered by insurance companies.

  • They provide the potential for higher yields compared to other safe money options.

  • Fixed index annuities protect the principal balance from loss.

  • The suitability of an annuity depends on individual circumstances and goals.

  • Key benefits of index annuities include safety, growth potential, liquidity, and the option of guaranteed income riders.

  • Beware of overblown promises of earnings and hidden fees.

  • The safety of index annuities in a market crash and how annuity companies make money.

  • The choice of a fixed index annuity company should be based on the specific features and benefits of the annuity that align with your goals and retirement plan, rather than the reputation or promises of the company itself.

  • Before you buy anything, you must understand the contract and how it fits into your overall financial strategy before investing.

To learn more about this and other Health related topics, talk with a professional in your community with Elkin Insurance. See for yourself the Elkin Insurance difference. At Elkin Insurance "We Care About You".

Call: 336-366-0960

Text: 336-366-0960


Jeremy Specht from Elkin Insurance is helping people understand the Annuity insurance world and navigating all of their insurnce needs


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