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!

http://www.forbes.com/2008/05/09/equity-index-annuities-oped...


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." http://www.brkdirect.com/SPIA/WHY.HTM

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

Curiously, JAFO
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