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So why pay a Rate Buy-Up fee on an index annuity? The short answer is, for the higher cap and participation rates.
But, is the higher potential gain worth the additional fee?
In years that the S&P 500 Index produces positive results, the results are typically strong. Capturing a larger portion of the Index growth helps accumulation-focused clients.
Consider the MarketMax Index Annuity’s 9% cap rate on the S&P 500 Point-to-Point Cap fee-based account, and this historical review. Based on annual Point-to-Point returns for each issue date since 1/1/80 and through 2/1/21, the following statistics apply:
- 79% of the time, the S&P 500 Index achieved a positive return
- 16.9% average S&P 500 Index return when the index return was positive
- 59% of the time, S&P 500 Index returns would’ve met or exceeded a 9% cap rate (before fees)
MarketMax and MarketForce Bonus Index Annuities are attractive alternatives for clients seeking greater accumulation potential, yet still seek the downside protection of an index annuity.
Impressive cap and participation rates are available in exchange for an annual fee on the allocations to Rate Buy-Up Accounts, plus EquiTrust has a strong commitment to renewal rate integrity.