Hybrid Fixed Indexed Annuity
A fixed indexed annuity policy whereby you deposit a lump sum amount with an insurance company for a term of
five to twelve years, in return for a selection of hybrid growth allocations. Allocations usually include
Triggers (a declared rate is credited if a trigger point is met), or Hybrid Blends (the mixture
of a stock or bond index return with a declared fixed rate). These allocations replace the
normal 'buffet style' allocations for most fixed indexed annuities.
A surrender term is the maximum period you must keep a policy in force before the values may be
fully withdrawn without penalty. The surrender term for a typical hybrid fixed indexed annuity ranges from 5 to 12 years, with 8 to 12 year terms being the most common.
Although liquidity varies by policy, these are the most common liquidity options that allows the owner to access the policy
value without incurring a surrender penalty: required minimum distributions, ten percent annual free-out distributions, nursing home and/or terminal illness distributions, income rider payments, annuitization.
As few hybrid fixed indexed annuity products may offer an up-front accumulation value bonus for an extra fee, while most do not offer a bonus.
Growth Allocation Options
A hybrid fixed indexed annuity offers various growth allocation options by design. These may include:
Blends, Spreads or Margins, Participation Rate, Mulitpliers, or Triggers
Lifetime payment options include annuitization, or an income rider. An income rider is an optional
add-on to an indexed income annuity that (in return for an annual fee) offers enhanced income
rider value growth during deferral, and guaranteed lifetime income payments while in payout. Payout
options include inflation or cost-of-living-adjustments ("COLA"), over a single life or joint lives.
A hybrid fixed indexed annuity typically pays out the remaining account value (if any) to the policy's
listed beneficiary(ies) at the death of the annuitant (or possibly owner). Some hybrid fixed indexed annuities
offer an enhanced death benefit payout for an additional annual cost.