Wendy-Swanson-30-What makes a fixed-index annuity different from other types of annuities

There's three major financial vehicles in which we can put our liquid cash into the first vehicle, we'll call that a fixed rate vehicle and places we get fixed rates are going to be at the banks or checking our savings and CDs would certainly have a fixed rate associated with it. You could also go to the insurance companies for a multi-year guarantee annuity. They will give you a fixed rate of return. You determine the amount of years that you want that. So what do people like about that? Well, there's safety obviously involved in these contracts, but don't they like about it? Well, you know, sometimes the interest rate can be a little lacklustre, but it is a nice, safe vehicle for you to take a look at. The second vehicle would be the variable risk. So these are going to be the stocks, bonds, mutual funds, money that's typically in your 401(k. Why do we call it a variable risk? Well, there's risk of, you know, potential loss. Now, certainly you can make great money as well, but there's no premium protection. In other words, I can lose money. And variable is the big question mark. You know, I think we're going to make money, but how much money am I going to make? 10 percent, 20 percent? You know, who knows? So that's another vehicle. The third vehicle is one we would call a fixed index annuity in what we love about this, as it kind of takes the best out of those two worlds. I'm going to have the safety that I'm used to at the bank because no matter what I put into that annuity, the money is going to be saved. I then associate my gains to an index, so an index would be something like the S&P 500, the Dow, the NASDAQ. There's literally hundreds of these indexes as that index is performing. I'm now capturing a portion of those gains into my annuity contract. However, if the markets were detained, let's say 08 were to occur again. What happens is I'm going to have a straight line there. What's critically wonderful about this is I have not lost a nickel of the original contribution, nor any of the gains that have been locked into the contract at that point. Once that S&P 500 returns or whatever index I'm associated with now, I'm going to start taking off and capturing more interest. And that's what we would call a fixed index annuity.