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Equity Index Annuity a positive option in chaotic market

An Equity Index Annuity works under a similar concept as a S&P 500 Market Index CD, said Bill Lea, CLU, ChFC, an investment broker with Lincoln Financial Advisors of Jackson.

“It`s timely for what`s going on in the market,” Lea said. “With the uncertainty of the market, it`s a place where people can safely put their money. Instead of buying one stock or one mutual fund, which could go north or south, you spread your risk among a large group of companies,” Lea said.

Primarily a retirement vehicle, the Equity Index Annuity combines the best features of both fixed and variable annuities. Tied to an index, the EIA has the stocks comprising an index tucked inside a tax-deferred wrapper, with a guarantee of principal, a 3% minimum interest plus 85% of the upside in the S&P 500, Lea said.

Index annuities may be locked in for one to nine years into one of several other indices, also including the S&P 400, NASDAQ 100, Russell 4000 and a number of international indexes. About 95% of Lea`s clients take the S&P 500, nine-year lock-in. The early withdrawal penalty is like a typical annuity, with 7% the first year, declining annually to 0% the ninth year, Lea said.

“Nobody knows what this market is going to do,” Lea said. “The question is – how long can America keep having the longest bull market in history when the rest of the world is in turmoil? A lot of investors have made money in the last 10 years and they are looking for ways to protect gains. This is an excellent way to achieve that goal.”

About Lynne W. Jeter

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