With all the different types of annuities, we understand that you can be overwhelmed when trying to plan for your future. In general, hybrid annuities combine the benefits associated with a deferred annuity with those of an immediate annuity. You may be hearing more and more about hybrid annuities recently and we’re here to help you understand them a bit more.

A hybrid annuity is an insurance company investment that gives an investor the option to allocate funds to both a fixed and a variable annuity. You may hear some investors refer to a hybrid annuity as a “equity-indexed annuity” or a “fixed-indexed annuity.” Sometimes variable annuities are also referred to as hybrid annuities. Because a hybrid annuity uses a passive investment strategy, it will not mirror the exact return of the stock market index. However, the hybrid annuity can be a powerful financial tool that is designed to meet owners’ long-term retirement needs.

Important benefits of the hybrid annuity are tax deferrals, principal protection, limited upside attached to an index option, and potential to add contractual benefits for income, death, and confinement care.

  1. You can shift gears between conservative and aggressive investing. Hybrid annuities give the owner the option to decide the amount of assets they want to divide into conservative investments or aggressive investments. Fixed-return investments are geared more toward conservative investors and usually yield a lower rate of return, whereas the more aggressive variable annuities can potentially offer higher returns for investors.
  2. You can enjoy guaranteed income. Hybrid annuities are going to be primarily for baby boomers and investors looking to retire because they offer guaranteed income for life or a set period of time. These annuities are set up to keep the policy owner’s money secure and have protection against inflation.