Comparison / Choices
What can be said that this chart does not explain? Perhaps, you could say that you can only appreciate the tax-deferred annuity after you compare it. An annuity can be quite an alternative, can't it? What other alternative gives your customers the freedom of when to pay taxes on their interest earnings?
Who will prefer the annuity? People who want a secure way to reduce current taxes. People who want to accumulate more money. Why? More money later can mean more spendable income later.
Note: the above answers are general in nature and cannot be specific since each of the above instruments could differ.
As you see in this chart, the Fixed-Indexed Annuity can provide the following advantages over the other alternatives mentioned in this chart: no up front sales charges and safety (compared to stocks and bonds) and taxation of earnings and guaranteed income when compared to the entire list.
On the other hand, the FDIC insurance and early access to 100% your money in the short term are advantages like CDs, money market accounts, and passbook savings can have over an annuity.
More importantly, a financial professional who recommends diversification and recommends that a consumer diversify among taxable alternatives and tax deferred alternatives is addressing the CONCERNS that most consumers have today: concerns that will be addressed in more detail in the pages that follow.
Annuity Comparison #2
Note: the above answers are general in nature and cannot be specific since each of the above instruments could differ.
As you can see in this chart, the annuity can provide the following ADVANTAGES over the alternatives listed here: no up front sales charges and fees and safety of principal (fixed annuity) and taxation, probate advantages, and guaranteed income (both fixed and variable).
On the other hand, one could argue that a mutual fund has fewer charges than a variable annuity. And the stepped-up cost basis that some alternatives have (that neither type of annuity have) are more advantages for non-annuity alternatives to be part of their portfolio. In addition, the potential gain of many of these alternatives can potentially far exceed the potential gains with a fixed or variable annuity because of the added risk (or lack of liquidity ) that some of these non-annuity alternatives have.
Again the genuine concerns that consumers have today can be addressed by a financial professional who cares more about the consumer than themselves and who tells a story of diversification.
1 Yes with fixed account
2 FDIC insured
3 Only at renewal
4 Loss of interest penalties
5 Government Bonds yes; Corporate Bonds no
