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UNDERSTANDING EQUITY INDEX ANNUITIES

UNDERSTANDING EQUITY INDEX ANNUITIES. Let’s think back to 1999 …. A. Consumers expected CD’s to return how much … 8% ? B. Consumers expected Mutual funds to return how much … 30% ?. What would consumers say was driving the market during those years?. Was it … GREED?.

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UNDERSTANDING EQUITY INDEX ANNUITIES

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  1. UNDERSTANDING EQUITY INDEX ANNUITIES

  2. Let’s think back to 1999 … • A. Consumers expected CD’s to return how much … 8% ? • B. Consumers expected Mutual funds to return how much … 30% ?

  3. What would consumers say was driving the market during those years?

  4. Was it … GREED?

  5. The wide difference in gains made it reasonable to take the risk of being in the market. I I CD’s – 8% MF’s – 30%

  6. Now let’s look at 2006… • A. Consumers expect CD’s to return how much … 4% ? • B. Consumers expect Mutual funds to return how much … 8% ?

  7. What would consumers say was driving this market?

  8. Was it … FEAR?

  9. Is there enough difference between returns to justify taking the additional risk of being in the market I I CD’s – 3% MF’s – 8%

  10. What if we could show you a way to eliminate the Fear, and feed your need for Greed?

  11. Equity Index annuities provide upside market potential, without the downside risk. • Most EIA’s protect against loss in the bad years ( FEAR ) • EIA’s also offer participation in market gains in the good years ( GREED )

  12. A simple example • When the market rises, you get about 60% of the gains. • When the market falls, you stay even.

  13. EIA’s perform very well in difficult conditions • A good strategy for consumers who can’t take risk in the market, • For consumers with low-risk tolerances • For consumers with retirement fund accounts

  14. A five year S&P 500 loss • September 30, 1998 – S&P closes at 1017.01 • September 30, 2003 – S&P closes at 995.97 • Representing an overall loss of 2% for the period

  15. Index Annuities performed competitively in the worst Bear Market since the Depression

  16. A Sample EIA Grew 40% *Based on an annual point to point strategy with a 60% participation rate. In other words when the market rises you get 60% of the gain. Based upon the following S&P 500 values: Sept 1998 – 1017, Sept 1999 – 1282, Sept 2000 – 1436, Sept 2001 – 1040, Sept 2002 – 815, Sept 2003 - 995

  17. The annual reset annuities did exactly what they were supposed to do • Participated in the index advances in 1998 and 1999 • Protected that interest gain when the market declined in 2001 and 2002 • Then reset at the index’s lower levels – to take advantage of the index’s climb in 2003

  18. When the market goes up – consumers win.When the market goes down – consumers don’t lose.

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