What Is The Profile Of An Index Annuity Buyer?
Index annuities are designed for people that are averse to risk. The type of person whom, if given a choice between an investment that has an equal chance of doubling in a year or losing 20% of its value versus an investment that will make 6%, will always choose the low risk/low return alternative. Certificate of deposit and traditional fixed annuity buyers fit this profile. Fixed index annuities can be used to overcome this aversion to risk by providing the potential for higher returns than traditional savings vehicles without market risk to principal.
