Why Are Some Annuities Called Hybrid?
The Annuity Man
Annuity salespeople love to over-hype and over-sell Fixed Index Annuities (FIAs). That's unfortunate, because FIAs are good principal protected CD type products.
FIAs are not stock market return strategies, even though that's how they are too often pitched. A few years ago, some really aggressive agents started using the word "hybrid" on TV and radio ads to promote FIAs. From there, it spread like an annuity pandemic!
In my opinion, the word "hybrid" should never be used. It's misleading, because all annuity types offer multiple benefits....and therefore could be called "hybrid." Hybrid is a plant. Hybrid is a car. Hybrid is a mattress. Hybrid is not an annuity. In fact, many carriers will not allow agents to use the word "hybrid" to promote FIAs...which is a good thing.
Here are the brutal FIA facts. FIAs were introduced in 1995 to compete with CD returns, not the stock market. FIAs are fixed annuities and regulated at the state level. FIAs are issued by life insurance companies, and are NOT securities. FIAs are not "too good to be true," and are contracts that fully protect the principal.
Fixed Index Annuities (FIAs) can be used as an efficient delivery system for attached Income Riders for future pension income needs. In my opinion, this is one of the best ways to utilize the FIA strategy.
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