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Bank CD Compared To Fixed Annuity

How is a bank CD different from a fixed annuity?  In this post we will talk about Bank CD Compared To Fixed Annuity.  They are more similar than you may think.  Here is a review of similarities and differences.

• Both CD’s and Fixed annuities offer a fixed interest rate for a set number of years. Terms such as 2, 3,5,7 and 10 years are common for both.   CD will provide shorter terms than an annuity as most fixed annuities will not offer a term less than 1 year.
• Interest rates have a guarantee for the full term on both products.  Once the investor reaches the term, they  may take the money out without any other obligation
• Fixed annuities tend to have larger penalties for taking the money out early.  While a CD will often just take the interest you gain as a penalty for early termination (taking money before term is over).   Fixed Annuities tend to charge penalties above just the interest you gain.   Both however are free of any penalties if the investor meets the full term.
• Most annuities will allow investors to take out 10% of the account value penalty free, per year, before the end of the investment’s term.
• Bank CD’s are FDIC insured, while Fixed Annuities are not.  Instead annuities are backed by the Guarantee Association of the state of issue.
• In general, a fixed annuity will offer a higher fixed return than a CD.  For example, the best current (As of April 3rd, 2014) 5 year fixed annuity rate is 3.2% for 5 years vs. the highest posted CD rate of 2.27% (Bankrate.com)

CLICK HERE FOR RATES OR MORE INFORMATION

Crowe and Associates is here to help you with all of your investment needs.  If you have questions, please either call us at (203)796-5403 or email us at edward@croweandassociates.com.  Also, feel free to ask us about insurance coverage.

Who Should Buy An Annuity

This post will help you decide Who Should Buy An Annuity.  There are many types of annuities.  In many cases an annuity is a contract between a person and an insurance company.  Often, the person is giving the insurance company an amount of money for a guarantee of future income.   Now there are multiple types of annuities the make finding the right annuity more complex.  The Single Premium Indexed Annuity (SPIA), Fixed Indexed Annuity and Deferred Income Annuity all popular but have different uses.

Read more

We work with annuity clients every day and we see the same mistakes made over and over.  Here is a quick list of the more common mistakes made that you should avoid.

Buying an annuity based on the company’s name- This is the biggest mistake I see made the most often.  Buying an annuity simply because you know the company name is a sure fire way to ensure that you are buying a product that is not competitive.  Look at the payouts when buying an annuity instead of just trusting that a big name company is going to be offering you a good deal. Most often,  it is the big name companies that are relying on that big name and are not looking to be best in class. They know they name will bring in customers so there is no need to be making a great offer. Read more

Annuities are often used to generate lifetime income streams for retirees.   SPIA’s and Income Riders are the two main ways to accomplish a lifetime income stream for a single person or for a couple.  Here I will explain how both work and the positives and negatives of each.

SPIA- (Single Premium Immediate Annuity)   A SPIA is one of the oldest types of annuities and are used exclusively as a tool to generate a lifetime income stream.  The concept is simple: The annuitant gives an amount of money to the insurance company and in return, the insurance company provides the annuitant with a lifetime income stream that they can not outlive. Read more

Choosing an annuity is made out to be the most difficult decision in the world but it really doesn’t have to be.  There is a logical progression to be made when making a choice.   In this post I will go over the steps that need to be taken to make the right choice.

Before getting into the steps, I would like to point out a few key points that will help you along the way.  The first is that there is not a “best” annuity for every thing or a company that has the “best” annuity for all situations.   Insurance companies jockey back and forth to offer the best product for a certain situation. They do not try to have the best product for every situation.  Also, they do not  keep their product competitive for long.  Usually an insurance company will offer a very competitive or the most competitive product for only 6 to 18 months and then they will lower rates. Read more

When someone is shopping for an annuity for life, it can mean multiple things based on their understanding of annuities.  Usually they are looking for either an immediate annuity or a deferred annuity.

If someone is looking to put money into a product and start to draw income immediately, they would be looking for an immediate annuity.  With an immediate annuity, people give the insurance company money in return for a guaranteed income stream for life.  In the past this could be a bad deal for a consumer if they died prior to their life expectancy but now most annuites come with a guaranteed return of premium feature to avoid this problem.   The most competative immediate annuities change on a monthly basis but these companies usually are among the most competitive….. Genworth, The Standard, Lincoln, Equitrust, American Equity and Great American.  They commonly have some of the higher immediate annuity payouts

Take warning: the current interest rate environment is not friendly to immediate annuities.  As a result, you will be subject to very low interest payouts currently.

The second meaning of “annuity for life” is usually someone looking for a deferred annuity.  This means they want to put money in now for a guaranteed payout later.  There are many advantages to a deferred annuity two of which are the higher interest rate they earn and the predictability of them.

The best method for a deferred annuity is to use a fixed indexed annuity with an income rider.  The fixed indexed annuity market was very competitive at one time but it is currently dominated by Security Benefit.  If someone wants deferred income they should be using either the Security Benefit Secure Income Annuity or the Security Benefit Total Value Annuity.  They simply have the highest payouts, end of story. If someone uses a different indexed annuity to produce future income, they are making a mistake.  This sounds harsh but it is the reality currently. This could change any day if a different company comes out with a new product or if Security Benefit makes changes to both products.

This blog holds other articles specific to the Security Benefit products.   Click here for more info on the Secure Income Annuity and Click here for more info on the Total Value Annuity.  Feel free to call Edward Crowe at 860-992-4494 or email at Edward@CroweandAssociates.com

Guggenheim currently offers a fixed annuity with the best rates available.  The annuity is a fixed annuity with terms ranging from 3 to 10 years.  The product works in the same fashion as a CD. The terms are fixed for the period selected.  At the end of the term, the money can be rolled over or taken out of the account.

Guggenheim is currently offering 2% on a 3 year term, 3% on a 5 year term and 3.7% on a 10 year term.   Rates sheets and product guides are available in the links below.  If you have any questions, please call Ed Crowe at 203-796-5403 or email Ed at Edward@croweandassociates.com

Guggenheim Product Brochure

Guggenheim interest rates

Guggenheim has come out with a new fixed annuity with rates guaranteed for the entire term.  Terms range from 3 to 10 years depending on your preference.   Details of the plan are below including a link for a product brochure.

Guggenheim Life – “Preserve Multi-Year Guaranteed Annuity”
Year Founded: 1985
Total Assets: $5.9 billion
Interest: This annuity pays a fixed and “guaranteed” interest rate that varies, depending on the term you choose and the amount you deposit.
Deposit Amounts $250,000 PLUS

Click For Guggenheim Fixed Annuity Rates
Term: Your choice of 3-10 years (walk away, no annuitization required).
Sales Charge: None
Minimum Deposit: $10,000 non-qualified / $5,000 qualified

Maximum Deposit: $1,000,000

Issue Ages: 0-90
Rate Lock Protection: 45 Days
Penalty Free Withdrawals: 10% of the previous anniversary account value in year two and later. Also waives withdrawal penalties upon death or annuitization. Includes Nursing Home Care and Terminal Illness Riders.

Preserve MYGA Guggenheim

Email Edward Crowe for additional information or applications:  Edward@croweandassociates.com