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Most people who have lived a little have heard some bad publicity about annuities. The first thing we need to understand is that there are three types of annuities. The first type of annuity that has been around for the longest is the Variable Annuity. This in particular has drawn the most scrutiny from the press and rightly so as most of these contracts from yesteryear have been built on over-inflated assumptions. The resulting lack of performance coupled with a high annual expense (3-11%) has left a sour taste in our mouths. Maybe some of you currently own Variable Annuities and have been loosing for years. You are inclined to stay in your Variable Annuity because either you think that the annuity has a death benefit associated with it, or you are facing high surrender charges to liquidate your account. As to the death benefit – it only reflects a cash value that you once had. Why throw good money after bad? The good news on the surrender charge is that we can find other investment companies that are willing to pay that surrender charge. The question becomes ‘Does that company give me a guarantee of better returns?’ That is where we at Lighthouse financial go to work for you.

In the past few years, a new breed of annuities have become popular, The Equity Indexed Annuity (EIA). Like the second type of annuity, the Fixed Annuity, the EIA offers safety of premium, tax deferral, minimum guarantees, flexible contract times and generous provisions for hardship scenarios. The difference between the Fixed Annuity and the EIA is that the EIA is performance-linked to a stock index, such as the S&P 500, the Nasdaq or the Russell 2000. We represent companies whose illustrations on the past 20 years show an annual return of about 8% a year. This may not be substantial to you until you understand that these contracts can never loose value. The advantage that we offer is years of experience and the ability to choose from virtually any company. We are independent and can search for the best positions and products for you.

These contracts are backed by the largest corporations in the world and have a guarantee that the owner will never loose original principle or gains made along the way. This is very appealing to people who have lost substantial sums of money in the most recent bear market and are on a fixed income. These people can’t afford to loose more money, as they can’t go back to work. At the same time, most people don’t have what they need for retirement so they still need to earn market returns which have much more potential than what a CD or money market can offer. The EIA gives you that potential without the risk of the market.

The highest paying and lowest risk EIAs are those, which feature a monthly averaging strategy, no fees, annual resets, 100% participation rates and no caps. This type of investment has outperformed virtually every other indexing strategy including the monthly cap, yearly cap, the high water look-back, and the variable participation rate.