Hi, my name is [presenter] with Forethought Life Insurance Company.

Transcription

1 Hi, my name is [presenter] with Forethought Life Insurance Company. Today we ll be talking about some of the myths and truths regarding fixed index annuities. 1

2 You may have wondered whether an annuity makes sense for you and, if so, what type of annuity makes sense for you. There are a few types of annuities available, but today we are discussing a specific type a fixed index annuity, which we refer to here as an FIA. This is not an argument for or against purchasing an annuity, and we aren t promoting a specific company s product. The goal of this presentation is to provide you with more information about this product, which could be a part of your retirement plan, so that you can have a more informed conversation with your financial advisor. There are common misconceptions about this type of annuity, which we will go over today. To begin, let s define what an FIA actually is and what it does. [Review slide] Taxable distributions (and certain deemed distributions) are subject to ordinary income taxes, and if made prior to 59½, may also be subject to a 10% federal income tax penalty. Early surrender charges and market value adjustments may also apply. Indices are typically unmanaged and not available for direct investment. Standard & Poor s, S&P, Standard & Poor s 500 and S&P 500 are trademarks of Standard & Poor s Financial Services LLC and have been licensed for use by Forethought Life Insurance Company. Fixed index annuities are not endorsed, sold or 2

3 promoted by Standard & Poor s and Standard & Poor s does not make any representation regarding the advisability of purchasing a fixed index annuity contract. 2

4 Deciding whether you should purchase a fixed index annuity requires careful consideration of your individual financial goals and situation. Annuities are not a one size fits all product. Remember to always discuss your financial planning with a financial advisor, who can make recommendations about what may be best for you based on your age, goals, retirement needs, and other factors. Your advisor may suggest an FIA after evaluating your specific situation. There are certain clients who are better-suited for an FIA. [Review slide] 3

5 You may be wondering whether an FIA is a substitute for equity investing. The answer is no, FIAs are not substitutes for equity investing. An important distinction between an equity investment and an FIA is that FIAs are not invested in individual stocks or other equities invested directly in the stock market. Instead, an FIA is linked, in part, to the performance of an index as a whole. FIAs receive interest credit based on positive index performance, while providing protection when index performance is negative. [Review chart to show where FIAs fall on the risk/return spectrum] 4

6 [Review slide] FIAs are designed to shield your money from losses, so you don t need to bounce back from market downturns. The index value at the end of one crediting period becomes the starting value of the next index period, so you continue to earn interest on your contract value without having to recover from a prior year s market loss, if any. [Reference chart to show FIA reset value against S&P value (adjusted for inflation).] Standard & Poor s, S&P, Standard & Poor s 500 and S&P 500 are trademarks of Standard & Poor s Financial Services LLC ( Standard & Poor s ) and have been licensed for use by Forethought Life Insurance Company. Fixed index annuities are not endorsed, sold or promoted by Standard & Poor s and Standard & Poor s does not make any representation regarding the advisability of purchasing a fixed index annuity contract. 5

7 An interest crediting method is the way in which a fixed index annuity earns interest on the account value. There are several different kinds of crediting methods, but the most common are annual point-to-point, monthly point-topoint, and fixed rate. [Refer to graphs on slide; explain each] 6

8 Fixed index annuities are designed to protect your principal from loss, so they often do have caps on the upside as a tradeoff for that protection. However, over time, an FIA generally performs positively, while market indices can fluctuate. REVIEW SLIDE 7

9 [Review slide/withdrawal chart] You can surrender (terminate) the contract if you have not yet started the payout phase. A surrender fee schedule typically applies for a defined period typically no more than 10 years. After that, all of the contract value is available without charge. Withdrawals may also reduce related benefits in an amount greater than the amount of the withdrawal. In addition, any withdrawals may be subject ordinary income tax and if taken prior to age 59 ½ are subject to a 10% federal income tax penalty. 8

10 You may have heard that tax deferral isn t an advantage of a fixed index annuity, since everyone eventually has to pay federal income taxes on their interest. But saving money in a tax-deferred annuity IS an advantage because your money accumulates tax-free, compounding potential returns without the drain of taxes. Plus, when you need to withdraw the money, you have the potential to be taxed in a lower tax bracket if retired. As you can see, the difference in accumulation over time can be significant. In this case, after 30 years, tax deferral generated an additional $143,264 vs. the taxable approach. The net result is $339,180 after taxes upon full withdrawal, which is $50,250 greater than the taxable accumulation amount. [Review slide] 9

11 Annuities are designed to provide you with a payout option. When you decide it s time to take income, you can annuitize your account and begin receiving an established amount of money for a set period of time. With a fixed index annuity, however, you have other options. [Review options listed on slide] 10

12 While there are costs associated with owning an FIA, consider the value for the benefits and guarantees you receive, including the benefit of tax deferral. Purchasing an FIA is an important decision, and your financial professional can provide you with a complete cost breakdown. You can then evaluate if the benefits of an FIA are worth it to you. Some important questions to consider are [Review slide] 11

13 That wraps up today s presentation. Thank you for coming. 12