No. of Recommendations: 5
Hawkwin: "I met with a couple last month that was sold an Alianz Endurance EIA (NQ) and a two Metlife SPIA (IRA)."

For us non-pros, are those Equity Indexed Annuity? and Single Premium Immediate Annuity?


Equity Indexed Annuity-

While there are countless variations to EIA contracts, they typically have the following provisions:

--Any money you put into the annuity will be guaranteed by the insurance company.

--EIA returns are linked to the performance of a stock market index, like the S&P 500.

--Your EIA's value will increase when the index rises, but only up to a predetermined limit, typically between 7% and 10%.

--You'll be allowed to withdraw up to 10% of the contract's value each year without penalty.

--Beyond the 10% allowed withdrawals, you'll be subject to redemption charges that vary depending on how long you've held the annuity.

--Redemption charges vary greatly from one insurance company to another. The lowest I have observed are 7% to 8% for the first year, declining to 0% after seven years. The highest I've seen have the redemption charges starting at 25% for the first five years!

Single Premium Immediate Annuity -

"Under current IRS rules use of after-tax funds to purchase an SPIA results in payments that are only partially subject to federal income taxes. The non-taxable portion of each payment represents the return of your original investment over the life of the annuity.

At the other extreme, if you purchase your SPIA with funds from a tax-qualified plan (IRA, TSA, 401(k) etc.), the payments you receive are generally fully taxable as they represent funds that have not yet been taxed."

Apart from dollars for the insurance agent, what are the supposed benefits for the clients?

Curiously, JAFO
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