Protecting Your Retirement

Savvy Seniors Pouring Billions Into Equity Index Annuities

Report By

Stephen J. Kaufmann,


Elder Law Attorney

Chartered Financial Consultant - Asset Preservation Advisor

After taking a terrible beating in the stock market since 2000, in some respects, reminiscent of the 1930s, savvy seniors are pouring tens of billions of dollars into Equity Indexed Annuities (EIA). More and More Savvy Seniors are find out it is very good and very true – and not one of those rare 'too good to be true plans. Some Index annuities as good as they sound – Very Good Indeed.

Safe Harbor

As an Elder Law attorney and Asset Preservation Advisor I am constantly seeking 'Safe Harbors' for my senior clients life savings they can earn attractive growth and most importantly easily convert to income. EIAs are an excellent safe harbor program that in most cases can do both for seniors.

Upside Potential - No Downside Risk

Unlike variable annuities, mutual funds, stocks are other high risk investments, most EIAs are fixed guaranteed annuities. Being an annuity means that the contract provides tax deferred growth and lifetime income options guaranteeing never to outlive your money. But EIA's strength - and big attraction to seniors- is that the contract guarantees that the policyholder will receive the upside potential of the stock market with no downside risk.

Not in the Stock Market - But Benefiting From Tracking a Stock Market Index

The concept of the plan is simple. While being a fixed guaranteed annuity and not actually investing in the stock market, the contract allows policyholders to benefit from the growth of one or more of several well known and accepted stock market indices such as the S & P 500, Dow Jones Industrial (DJIA), Nasdaq 100, Russell 2000. If the selected index rises - the policyholder participates in the gain. If the index shows a negative return, there is simply no gain but more importantly no loss of principal. In other words, when the market goes up, you go up. When it goes down, you don't lose a penny. That's a solid Safe Harbor!

Know All the Facts

While EIAs are outstanding plans they are not for everybody. They are long term guaranteed contracts. Further there are two hundred insurance companies writing thousands of different variations of EIAs. Interest crediting methods which underlay the contract guarantees vary a lot – as to caps and some are more complicated The less complicated I’ve found usually is more comforting for most Seniors.. I make sure my clients are fully educated and know all the details of the plan before they decide on a contract.. EIAs are designed for policyholders to put funds aside for 5 -7 - 10 years or more as selected. Like CDs there is a penalty for early withdrawal but generally policyholders can access up to 10% of the policy a year without any penalty…a very good accessibility and liquidity feature. Some contracts have 'caps' that limit somewhat the upside growth. Some caps are 7% a year. Some 12%. Some 30 %. Some have no caps. They help the insurance company assure its guarantees to you. There are normally no upfront sales charges or annual management fees - so 100% of your money is working for you from the first day as long as you don’t surrender the contract too early. Most companies initially only guarantee 90 % of the deposit in case of early surrender. If you keep your funds in for the full term – which is what this contract is intended for - your guarantee would equal at least if not more than your original 100% deposit in the worst case scenario if the market crashed or if the index never went above its original number.

EIAs Are Very Safe - and An Excellent Safe Harbor

Many seniors ask me if fixed Equity Indexed Annuities are safe. Absolutely. Here are some things you need to know. For each dollar you put into the annuity, about $1.00 of the insurance company's Capital & Surplus is put into Reserve. Banks, for example usually only put 3 to 10 cents per dollar received in reserve. Because of this, insurers are able to insure 100% of your principal against loss while you are participating in the gains of the selected stock market index.

Contact LIFE Planners

To learn more about Equity Index Annuities and to see if they are for you, contact me for a no obligation telephone or personal assessment at 1-800- 231-6890 or 540-743-6077 or EIAs are a very good product if used and understood and the contract issued properly. Every EIA contract should be reviewed by an elder law attorney for proper asset preservation with legal strategies to work properly.


Stephen J. Kaufmann, JD, MBA, CLU, ChFC, CPCU, FLMI, CEPP Elder Law Attorney, Chartered Financial Consultant - Asset Preservation Advisor Steve has over 30 years experience in helping Seniors, Families and Businesses grow and protect their assets. He is the former Virginia Deputy Commissioner of Insurance.
He has authored several books and videos. Satellite offices throughout Virginia.

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