The thermometer is reading 112 degrees as I write this email here in sunny Gilbert, Arizona! Walking outside feels like opening your oven as the hot blast peppers your skin. “Yeah but it’s a dry heat,” we tell ourselves. Not to be over dramatic, but as hot as it is, it’s nothing compared to what we are seeing with annuity rates right now.

Let me give you a few examples:

Fixed Deferred Annuities

Fixed annuity rates are the highest we've seen in years. Five - year deferred annuities, also known as Multi Year Guaranteed Annuities (MYGA), which pay no tax until you take withdrawals, are paying as high as 3.65% per year, guaranteed for the full five-year term. Assuming a 28% tax bracket, that’s a 5.11%tax equivalent effective yield.

Indexed Annuities

We are now in the biggest increase and longest bull market for the Dow Jones post –WWII. There's a chance this bull wave will continue several more years; however, there is a mountain of evidence to suggest a downturn is coming and coming soon.

If you want protection from a potential downturn, yet still ride the wave as this bull cycle continues, you should consider Indexed Annuities. You can hedge your bet and get the safety of a fixed annuity’s guaranteed no-loss-of-principal while still participating in the upside of your chosen market Index.

Indexed Annuity participation rates are hotter than my steering wheel at 3:00 pm in the afternoon. One index participation rate is as high as 170% of the Index with no upside earnings cap. If you are unfamiliar with participation rates, that means how much of the movement of the Index you will be exposed to and credited interest.

Short Term Indexed Annuity rates are the highest they've been in over a decade. We have one five-year Indexed Annuity that is giving 100% Index Participation on the S&P 500 5% Low Volatility Index, which was up over 14% last year. Another innovative Indexed Annuity offers terrific hedging potential and includes an Inverse Index to the S&P 500. If the Index is negative at all for the year you would be credited over 8% interest. If its up, you get 0% for that portion of your funds invested.

Remember, with Indexed Annuities, your principal is protected, and your interest, once credited is locked in and banked with each crediting term. So if this bull market continues and has a final run up like in 1999 and early 2000, you will continue to participate in the growth. If and when the correction occurs, you will sit safely on the sidelines. Heads you win, tails you don’t lose.

Long Term Care Annuities

If you have been investigating long term care, you probably have learned that traditional long term care is going the way of the dinosaur. That doesn’t mean you still don’t need long term care insurance. In fact if you are a woman age 65 or older you have an 80% chance of experiencing a long term care event at some point in your life.

Recent innovations in hybrid long term care annuity combos can make great long term care solutions. There are several LTC/Annuity combos that will immediately leverage your annuity value three times for your long term care benefits. In other words, $100,000 deposited will generate up to $300,000 in potential care benefits, and they can be used jointly.

If you have an old annuity, you can exchange it by making a 1035 tax-deferred exchange into a new hybrid LTC Annuity. Thanks to provisions in the 2006 Pension Protection Act, any withdrawals taken for long term care purposes can be withdrawn tax-free.

Hybrid long term care annuity rates are heating up as well. One Fixed LTC Annuity is paying 3.4% interest and can be transferred with IRA/qualified funds. Hybrid annuity availability can vary greatly from state to state as well the source of funds you can use. Call us to find out if hybrid LTC annuities make sense in your situation. Sometimes hybrid life insurance with long term care can be an even better care solution. You can learn more by requesting our special report “Leveraged Care Solutions” which describes the various hybrid long term care solutions. Please call 888-892-1102 or CLICK HERE to request our free report.

There's no telling how long we can go before the next big correction. The Fed wants to continue to raise rates, but as Dr. Mark Skousen says, every time the Fed has continued to raise rates, an ensuing downturn was sure to follow. Now might be a great time to bank some of your recent earnings and move your funds into the safe harbors of a guaranteed annuity.

Please call us at 888-892-1102 or reply to this email and we can discuss which annuity or combination of annuities is the right strategy for you.

Todd and David Phillips