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FIXED INDEX ANNUITY HEDGING - Insurance Lead Conversion Video | WebPrez

Name: FIXED INDEX ANNUITY HEDGING - Insurance Lead Conversion Video | WebPrez
Uploaded: 2019-08-10T00:17:55+00:00
Duration: 1 min 3 s
Channel: Michael Viñal
Description: The video explains how Fixed Index Annuities (FIAs) credit interest by tracking the gains of a market index such as the S&P 500 while guaranteeing that…

10 Aug 2019 · 1 min

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The video explains how Fixed Index Annuities (FIAs) credit interest by tracking the gains of a market index such as the S&P 500 while guaranteeing that the principal cannot be lost when the index declines. It introduces the concept of index hedging: the insurer pools the policyholder’s money into its asset portfolio, primarily high‑grade corporate and government bonds that generate a conservative 4‑8% annual return. A small portion (typically 3‑5%) of the portfolio is used to purchase options that give exposure to the market index’s upside without actually buying the index or individual stocks. This structure allows the contract to offer market‑linked growth potential with principal protection, forming the core selling point for retirement insurance leads.

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Indexed Retirement Insurance contracts credit interest to your money by tracking the gains of a market index, like the S&P 500, but without the risk of losing any of your money whenever the market index is down. It's based on an innovative money management strategy known as index hedging, and here's how it works. The money you put into your retirement insurance contract is added to the insurance company's asset portfolio, which is comprised mostly of high-grade corporate and government bonds, assets that reliably yield a conservative annual return in the range of 4 to 8%, depending on the quality of the bonds and the management of the assets. The insurance company will then take a small percentage, typically 3 to 5% of their investment assets, and purchase an option to buy or sell shares of a market index. Now, the insurance company does not actually buy shares of an index fund, nor does it buy stock in any of the companies