Safe Harbor Financial knows that there isn’t one type of financial product that’s the right fit for everyone. Even within demographic groups, for example, retirees and those nearing retirement age – or veterans receiving military pensions – people’s situations are different. Very often, investment advisors will recommend certain funds or annuities because it benefits them, not their clients. Financial planners may be commissioned and do not necessarily have a fiduciary responsibility to their clients – but Jim Byrd and his team at Safe Harbor Financial do. This means we have a legal and moral obligation to protect our clients’ assets and make their financial interests our highest priority.
What is a hybrid annuity?
A hybrid annuity is an investment product offered through insurance companies that allows an investor the option for allocating funds to both a “fixed” and a “variable” annuity (hence the name “hybrid”). As the investor, you are actually the holder of a policy that outlines how your money is to be invested. Hybrid annuities are complex investment products so it’s important for anyone considering investing in a hybrid annuity to be comfortable with all its provisions before signing any contracts.
What are the advantages of hybrid annuities?
One big advantage of a hybrid annuity is its potential for earning market-linked interest without the same exposure to market risk. These annuities are set up to keep the policy owner’s money secure and protect against inflation. Principal stays safe regardless of market conditions, but this passive investment strategy means that a hybrid annuity will not provide returns that exactly mirror the stock market index.
The tradeoff is usually acceptable for clients seeking a financial tool that will meet their long-term retirement needs. These annuities are set up to keep the policy owner’s money secure and to allow for inflation and increases in cost-of-living expenses. Other benefits of the hybrid annuity include:
- the option to divide assets into conservative vs. aggressive investments;
- tax deferrals;
- the ability to add additional contract riders to provide benefits for income, long-term care and/or death.
Hybrid annuities have become popular in recent years as baby boomers retire because the offer guaranteed lifetime income. You may not become rich, but you’ll never be poor.