Interest Rate Risk

Interest Rate Risk – Index annuities are not protected

I’m constantly surprised to hear top advisors who are so misinformed.  I hear again and again that fixed indexed annuities (FIA) do not have interest rate risk.  I was at a training in Las Vegas the first week of December 2016 and the from the front of the room, “FIAs are risk free… they don’t have market risk and they don’t have [interest] rate risk.”

I sat there shocked to hear this misinformation being promulgated by alleged “experts.”  When you are highly trained, as I am, you can spot the fallacies in people’s’ statements or claims.

Here is an article that confirms my view of these products being subject to interest rate risk.

Read the full article

Read the full article – look for ‘The performance of fixed annuity companies is most affected by interest rates and if rates rise “it’s not a good thing, it’s a great thing,” Kvalheim said.’  This is the third paragraph from the end.

As I drove to an appointment today it is predicted that the “Fed” will raise interest rates.  This will likely be a small increase, but it will have an impact on Fixed Index Annuities.

When you purchase Fixed Index Annuity – give thought to what you want to accomplish.  Do the guarantees alone satisfy what you are buying or are you also dependant on the index credits?  If you are dependant on the index credits you need to be aware of the company’s rate history and under what conditions can the company change its crediting caps, spreads and participation rates.

Second Opinion Option

Consider our second opinion [click for details] – you can keep your current agent.  For a fee we can evaluate the annuity you are considering.  Show you what works, where it might fall short and what we might suggest instead.  NOTE: payment is required before the analysis.  The fee for this service may be returned or applied to further financial planning if you purchase an annuity through us.