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What is a Fixed Index Annuity?

A Fixed Indexed Annuity (FIA) is a fixed annuity that provides a guaranteed lifetime income and interest rate while preserving and protecting your investment premium. You do not pay taxes on your premium or interest until you take withdrawals or receive income. Unlike traditional fixed annuities, additional interest may be earned based on positive changes in commonly used financial indices such as the S&P 500 or the Dow Jones Industrial Average. Because the annuity you purchase is indexed, your premium and credited interest can never be lost due to an economic downturn.

How do I know a Fixed Indexed Annuity is safe?

A Fixed Indexed Annuity is a contract between you and the insurance company that issues your policy. Fixed Indexed Annuities are monitored and regulated by the Department of Insurance of the State from which they are issued. The annuity is additionally protected by the financial strength and claims paying ability of the insurance carrier. Each state's insurance regulator maintains jurisdiction over the insurance carrier and determines the specific amount and level of protection to which the individual investor is entitled.

Is it true that my annuity has fees?

Current advisors will tell you that all annuities have fees. Variable annuities have fees that average 2.5% per year, but Fixed Indexed Annuities do not have any management or contract administration fees. The primary cost to a fixed annuity is committing the money for a period of time. The insurance company pays us and other advisors a commission which does not come from the client's money; the commission is paid from the earnings of the insurance company. As long as you do not select an income rider or take withdrawals in excess of the penalty-free withdrawal amount, you will own your annuity and not incur any fees.

Can I liquidate my annuity?

There are many options available for withdrawing your money. The annuities we offer allow you to withdraw up to 10% after the first year - without penalty. In the event of premature death, your beneficiaries can choose to receive your annuity's accumulated value as a monthly or lump sum payment.

Are there any rate caps that limit the gains I can make on my investment?

Unlike most other investment tools, FIAs are designed to provide an increased level of protection against prolonged market downturns. Although the rate of growth is limited, your principal and subsequent market gains are not at risk of loss due to bear markets or weak economic conditions. If the index upon which your annuity is based performs well, you will receive a percentage of that growth. Should the market take a nosedive, your principal and interest earned will not be lost.

Aren't there other investment options with unlimited growth potential?

Yes, there are; however, most of these options carry with them the corresponding potential for unlimited loss. Since our beginning, U.S. Financial Services, Inc. has never had a client to lose one penny of their annuity investment. Also, in addition to being free of management and administrative fees, fixed indexed annuities have the potential to earn more interest than traditional fixed annuities and other safe money alternatives.

How do I know if a Fixed Indexed Annuity is for me?

As John Anwar always points out at his seminars, there isn't a perfect investment tool. It is our belief that as investors grow older they should be safer with their money. Our average client is at or nearing the age of retirement and wants to safeguard their assets. If you want unlimited growth potential and are willing to assume the risk of unlimited loss, then a fixed indexed annuity is probably not the right choice for you. If you are concerned about protecting your principal and enjoying a reasonable rate of return on your investments, then we feel you should join our U.S. Financial Services Family.

Where can I learn more about Fixed Indexed Annuities?

We strongly recommend that you visit the website of the National Association for Fixed Annuities (NAFA) at

  • Better Business Bureau
    Member, Better Business Bureau of Charlotte/Southern Piedmont  A+ Rating
    Phone: (704) 527-0012  
  • NC Department of Insurance
    Phone: (800) 546-5664
    NCDOI Divisions, Services for Consumers, Company License Status: U.S. Financial Services, Inc.
    Agent License Status: John K. Anwar
Is diversification the key to safety?

Investors have forever been told that diversification is the key to safety. Although diversification may help in lowering the risk of total loss, it is not a "foolproof" plan to safety. As Lisa Smith reports for MSNBC's TODAY Money, diversification does not always work. Investors are encouraged to appropriate at least a portion of their portfolio to annuities and other investments that are not directly linked to the stock market.
Source: Plan carefully to make sure your 401(k) doesn't flounder
By: Lisa Smith