Annexus BCA Annuity
The Annexus BCA annuity is a fixed indexed annuity. This is a specialized offering from Aviva. Unlike a traditional fixed annuity that offers a fixed interest rate for a set number of years. The Annexus product uses an interest strategy based on performance of the S & P 500 while it still provides a 100% principal guarantee.
The idea behind the Annexus product is that it provides an opportunity for superior returns compared to either a bank CD or fixed annuity while it still provides a guarantee against loss.
It attempts to accomplish this with a unique interest strategy. The following description intends to give clients a general understanding of the product. Returns are based on the S & P 500 using a 2 year point to point strategy. The gain in the S & P over a 2 year period is used to determine the return provided to the client. After 2 years, the point to point is reset and another 2 year term will begin.
Not all of the return is provided however. 40% of the funds that clients place in the account are in a fixed account that yields a declared interest rate. This leaves 60% of the money in the S & P. Some of that gain has a further depression because of the annual spread. “Annual Spread” is an amount of the overall return the company keeps prior to giving the reminder to the client. The spread ranges from 1% to 2% this amount depends when the client purchases the product.
Given the above details:
The Annexus product is certainly going to lag behind the standard S & P return. The fact that it will allow no less than a 0% interest credit in a negative 2 year cycle helps the performance of this product. The bottom line is that the product certainly does protect against poor market timing with the 0% floor but it will also provide lower returns than the S & P in positive years.
An example of returns from the Annexus product vs. the S & P 500 is provided here. Annexus BCA 12 Annuity
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