Securities are Investment Opportunities, Indexed Annuities are Contracts

When someone buys an investment, they are purchasing an opportunity. Neither the broker, the mutual fund, the company in which they are buying stock, the NASD, nor any other entity, offer them any promises, no guarantees, nor any certainty of how that opportunity will ultimately pan out. If you buy a security, you do not get anything in writing that tells you what your investment will be worth at ANY point in the future. In fact, the only performance information that a broker is even allowed to give you is a review of past performances. When someone buys a fixed or indexed annuity, however, quite different from an investment, they are not buying an opportunity; they are purchasing a contract from an insurance company. In essence, they are exchanging their sum of money, for a specific set of benefits, clearly detailed in a written contract. ALL of the guaranteed provisions of that contract are not dependant upon the performance of the stock market, but are backed by the financial strength of the issuing insurance company. Within the pages of an indexed annuity contract, the purchaser is provided with a list of the guaranteed minimum values of their contract for any given year, for the life of the contract. The owner of an indexed annuity assumes NO MARKET RISK and has no potential for market conditions to devalue his contract. With the unique methods used within indexed annuities, in order to determine interval interest credits, the owner simply has the potential to earn a greater interest than the guaranteed minimum, when the linked index increases, but is contractually protected from a reduction in his contract value, when the index goes down.