How Does Annuity Work

Few people have done more to educate the American public in regards to financial scams than Jay Adkisson. As the creator of Quatloos.com, Jay has helped numerous thousands of people global refrain from being scammed out of galore millions of dollars to respective investment schemes. The U.S. Senate Finance Committee has twice called Jay as an expert witness on abusive tax schemes. As one of the writers of Asset Protection: Concepts and Strategies (McGraw-Hill 2004), Jay has also helped thousands of people stay clear from dubious asset shelter schemes.

In his latest book, Equity-Indexed Annuities: The Smart Consumer’s Guide, Jay gives a balanced and goal to be attained overview of this modern form of fixed annuity to better educate buyers of the advantages, disadvantages, and the galore product choices that are available when taking into account the buy of this standard retirement vehicle.

This short guide covers all the most primary issues that buyers will have to address before purchasing an equity-indexed annuity, including:

About the AuthorJay D. Adkisson is an investment advisor and attorney. He is best known as the creator of Quatloos.com which is an globally widely known and esteemed internet site that educates the public when it comes to financial and investment scams and tax frauds. Jay has twice been an expert witness for the U.S. Senate Finance Committee, and is one of the writers of Asset Protection: Concepts and Strategies (McGraw-Hill 2004) and the author of Lost Eye: Coping with Monocular Vision after Enucleation or Eye Loss from Cancer, Accident, or Disease (2006).

How Does Annuity Work Picture

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Most helpful client reviews

23 of 23 people found the following review helpful.
Concise and Objective
By Shark Diver
Bought after having read with regards to it in Jay’s newsletter. This is a guide that each insurance agent who sells EIAs ought to read, and each person who is fascinated in purchasing EIAs must read — there would be no more improper or undesirable sales, and those humans who could gain by them may do so without worry.

2 of 2 people found the following review helpful.
Excellent Book Overall
By Jeff Clark
This book is a very balanced comprehensible statement and review of the Indexed Annuity landscape. While galore criticisms are not applicable to all productions this little book does a very creditable occupation of getting all the essential issues on the table. I commend this book to all that would like to learn more regarding this savings vehicle. Jeff Clark CPA

1 of 1 persons found the following review helpful.
Easy Read
By Michael D. Wolf
I was looking for a good reference guide for my clients. This book was very easy to read and understand, I would highly commend this for anybody who wants to understand EIA’s.

See all 6 client reviews…

Annuities Explained 2

The all-new Kindle has a new electronic-ink screen with 50 percent better contrast than any other e-reader, a new sleek design with a 21 percent littler body while still keeping the same 6-inch-size reading area, and a 17 percent lighter weight at just 8.5 ounces. The new Kindle also offers 20 percent more immediate page turns, up to one month of battery life, double the storage to 3,500 books, built-in Wi-Fi, a graphite color option and more—all for only $139.

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28697 of 29003 humans found the following review helpful.
Kindle vs. Nook (updated 6/2/2011)
By Ron Cronovich
When I wrote this review last August, there was only one Nook, which is now called “Nook First Edition.” It proceeds to be available, but there are two new Nooks. The Nook Color was introduced last fall – it’s basically a tablet computer, and runs the Android software that is frequent on a good deal of smartphones nowadays. It’s twice as heavy and costs twice as much as a Kindle, but equated to other tablet computers, it is a very good value.

And now (early June 2011), a new e-ink based Nook is coming out. It’s called the “Nook Simple Touch.” It is just now starting to ship, so evidently I don’t have one and can’t tell you anything regarding it that you can’t learn by reading online reviews. But the reviews are very favorable, so if you’re giving careful consideration to a Kindle, you must take a look at the new Nook Simple Touch, too.

But the Kindle is notwithstanding still a compelling option. It’s a mature product, very well designed and easy to use, performance is very zippy, it’s competitively priced, and no e-ink based reader has a better, more readable display than the Kindle, not even the new Nook Simple Touch. Also, the Kindle universe is rather extensive: the Kindle store is outstanding and has a great deal of thousands of free e-books as well as good deals on most other e-books, and once purchased, you may read your Kindle books on almost any device you own (computer, phone, tablet), not just your Kindle. And there are tons of outstanding cases and other accessaries for the Kindle.

So, while my review compares the Kindle to the older Nook, I’ll leave it here because it has a ton of info with regards to the Kindle, a outstanding e-reader that deserves your attention, and because the initial Nook proceeds to be available. That said, I urge you to NOT buy the primary Nook. It was a respectable e-reader when it came out in 2009, and still had galore value when I wrote when it comes to it in August 2010, but it is without doubt or question inferior by today’s standards.

———— my introductory review ————–

If you’re attempting to choose amid a Nook and a Kindle, perhaps I may help. My wife and I have owned a Nook (the introductory one), a Kindle 2, and a Kindle DX. When Amazon declared the Kindle 3 this summer, we pre-ordered two Kindle 3′s: the wi-fi only model in graphite, and the wi-fi + 3G model in white. They arrived in late August and we have applied them very steadily since then. For us, Kindle is better than Nook, but Nook is a good device with it is own vantages that I will talk about below. I’ll end this review with a few words regarding the Nook Color.

First, reasons why we prefer the Kindle:

* Speed

In our experience, the Kindle is very zippy equated to the Nook. Page refresh speed (the time it takes a new page to appear after you push the page-turn button) was WAY quicker on Kindle 2 than on Nook, and it’s more quickly yet on Kindle 3. Yet, I read a whole book on the Nook and didn’t find the slower page refresh to be annoying – you get used to it, and it’s not a problem.

For me, the more essential speed divergence worries navigation – moving the cursor around the screen, for example to pick a book from your library, or to jump to a chapter by selecting it in the table of contents. On Kindle, you do this by pushing a 5-way rocker button, and the cursor moves very quickly. On Nook, you do this by activating the color LCD touchscreen (which normally shuts off when not in use, to conserve battery). A “virtual rocker button” appears on the screen, and you touch it to move the cursor. Unfortunately, the Nook cursor moves very sluggishly. This might not be a big deal to you, but it genuinely got annoying to me, in particular since my wife’s Kindle was so quick and responsive.

In November 2010, Nook got a software upgrade that increments page refresh speed and makes navigation more responsive. I returned my Nook months ago, so I can not tell you if the Nook’s performance is now equivalent to the Kindle’s, but Nook owners in the remarks section have convinced me that the software update improves the experience of using the Nook. If performance is a big factor in your decision, visit a Best Buy and compare Kindle and Nook side by side.

* Screen contrast

You’ve seen Amazon’s claims that the Kindle 3 e-ink has 50% better contrast than Kindle 2 or other e-ink devices. I have no way of precisely measuring the betterment in contrast, but I may tell you that the Kindle 3 display unquestionably has more contrast than Kindle 2 or Nook. The divergence is noticeable, and important: more screen contrast means less eyestrain when reading in poorly lit rooms.

In well-lit rooms, the Nook and Kindle 2 have sufficient contrast to grant for comfortable reading. But I often read in low-light conditions, like in bed at night, or in a poorly lit room. In these situations, reading on Nook or Kindle 2 was a bit uncomfortable and often gave me a mild headache. When I got the Kindle 3, the extra contrast was without delay noticeable, and made it more comfortable to read beneath less-than-ideal lighting conditions. (If you go with a Nook, just make sure you have a good reading lamp nearby.)

* Battery life

The Nook’s color LCD touch screen drains it is battery quickly – I could never get more than 5 days out of a charge. The Kindle 2 had longer battery life than the Nook, and Kindle 3 has even longer life: in the 3 months since we received our Kindle 3′s, we quintessentially get 3 weeks of battery life amidst charges. (We keep wireless off in regards to half the time to save battery power.)

* Weight

Nook weighs in regards to 3 ounces more than the new Kindle, and you may actually feel the difference. Without a case, Nook is still light sufficient to hold in one hand for long reading sessions without fatigue. But in a case, Nook is a heavy sucker. The new Kindle 3 is so light, even in a case, we find it comfortable keeping in one hand for long reading sessions.

Reasons some humans might prefer the Nook:

* In-store experience

If you need help with your nook, you may take it to any barnes and noble and get a real humane to help. You may take your nook into the coffee shop section of your local B&N store and read any book for free for up to one hour per day. When you take your nook to B&N, a lot of in-store special deals and the occasional free book pop up on your screen.

* User-replaceable battery

Rechargeable batteries at long last lose their capacity to hold a charge. Nook’s battery is user-replaceable and comparatively inexpensive. To replace Kindle’s battery, Amazon wants you to ship your Kindle to Amazon, and they will ship you back a DIFFERENT Kindle than the one you sent (it’s the same model, for example if you send a white Kindle 3, you get a white Kindle 3 back, but you get a “refurbished” one, NOT the precise one you sent them). I don’t like this at all.

However, various humans have posted remarks here that have eased my concerns. Someone looked up stats on the Kindle’s battery and did a good deal of simple calculations to show that it will have to last for 3 or more years. Before that happens, I will surely have upgraded to a newer Kindle model by then. Also, somebody found galore companies that trade Kindle batteries at reasonable cost and have how-to videos that demonstrate how we may replace the battery ourselves. Doing this would void the Kindle’s warranty, but the battery will probably not fail until long after the warranty expires.

[update June 2011: The batteries in the Nook Color and Nook Simple Touch are not replaceable, but the battery in the basi Nook is.]

* ePub

Nook uses the ePub format, a widely employed open format. Amazon uses a proprietary ebook format. Many libraries will “lend” ebooks in the ePub format, which works with nook but not kindle. However, a free and reputable program called Calibre allows you to translate ebooks from one format to another – it supports a heap of formats, including ePub and Kindle. The only catch is that it doesn’t work with copy-protected ebooks, so you can’t, for example, buy a Kindle book (which is copy protected) and translate it to ePub so you may read it on a Nook.

* Nook’s color LCD touchscreen

The original Nook has a little color LCD screen on the bottom for navigation. This could be a pro or con, depending on your preferences. It makes the Nook hipper and less drab than Kindle. Some persons get enjoyment from using the color LCD to view their library or navigate. I did, at first. But after two weeks of use, and comparings with my wife’s Kindle, I found the committed buttons of the Kindle more comfortable and far more immediate to use than the Nook’s color touchscreen. I likewise found the bright light from the color screen distracting when I was attempting to read a book or newspaper (though when not in use, it shuts off after a minute or so to conserve battery).

* expandable capacity

Nook comes with 2GB of internal memory. If you need more capacity, you may insert a microSD card to add up to 16GB more memory. Kindle comes with 4GB of internal memory – twice as much as Nook – but there’s no way to exaggerate that. Kindle doesn’t receive memory cards of any type. If you primarily use your device to read ebooks and newspapers, this shouldn’t be an issue. I have over 100 books on my Kindle, and I’ve used only a tiny fraction of the memory. Once Kindle’s memory fills up, just delete books you don’t need prompt access to; you may always restore them later, in seconds, for free.

A few other notes:

Kindle and Nook have other features, such as an MP3 player and a web browser, but I caution you to have low expected values for these features. The MP3 player on the Kindle is like the first-generation iPod shuffle – you can’t see what song is playing, and you can’t navigate to other songs on your device. I don’t like the browser on either device; e-ink is just not a good engineering science for surfing the web; it’s slower and clunkier than LCD screen technology, so even the browser on an Android phone or iPod touch is more pleasurable to use. However, numerous commenters have more favorable views of either device’s browser, and you might, too.

* ebook lending

If you have a Nook or a Kindle, you may “lend” an ebook you purchased to an individual else with the same device for up to two weeks. The Nook has always had this feature. The Kindle just got this feature as of December 2010. Most but not all purchased ebooks are lendable, due to publisher restrictions.

* PDF aid

Kindle and Nook both handle PDF files, but in dissimilar ways. When you put a PDF file on your nook, nook converts it into an ebook-like file, then you may adjust the font size, and the text and pagination will adjust just like with any ebook. But you cannot see the initial PDF file in the native format in which it was created. Kindle 3 and Kindle DX have native help for PDF files. You may see PDF files just as they would appear on your computer. You may also convert PDF files to an ebook-like format, and then Kindle handles them just the way the Nook handles them – text and pagination adjust when you modify the font size. Unfortunately, numerous symbols, equations, and graphics get lost or mangled in the translation – even when looking at PDF files in their native format on the Kindle. Moreover, the little screen size of the Kindle 3 and the Nook is not outstanding for PDF files, most of which are designed for a more spectacular page size. You may zoom and pan, but this is cumbersome and tiresome. Thanks to commenters who suggested observing PDF files in landscape mode on the Kindle (I don’t recognise if you may do this on Nook); this way, you may see the entire top half of the page without panning, and then scroll down to the bottom half. This works a little better.

SUMMARY:

Nook and Kindle each offer their own advantages. We like the nook’s user-replaceable battery, compatibility with ePub format, and in-store experience. But we strongly prefer Kindle 3 because it is performance is zippier, it is higher-contrast screen is posing no difficulty to read, and it’s littler and lighter so it is more portable and more comfortable to hold in one hand for long reading sessions.

* Nook Color

Everything I wrote regarding the Nook in this review applies to the firstborn Nook (which proceeds to be available), not the new Nook Color. To me, the Nook Color is in a dissimilar product category than the Kindle or introductory Nook. Nook Color has an LCD screen, like an iPad or most computer monitors. That’s a huge disfavor for people like me, who get headaches from reading a computer screen for long periods of time. Amazon’s Kindle product page has an informative division on e-ink vs. LCD displays.

But galore humans don’t have difficultnesses reading from computer screens, and the Nook Color is getting glowing reviews in the press and by owners. For the money, it offers a lot of functionality such as a good web browser and the capacity to play games and watch movies. But keep in mind: it costs a lot more than the Kindle, it weighs almost twice as much, it doesn’t come in a 3G version, and (unlike the original Nook) the Nook Color doesn’t have a user replaceable battery.

2212 of 2249 persons found the following review helpful.
I Wanted a Dedicated E-Reader, and That’s What I Got
By Matthew E. Coenen
I’m a first-time Kindle owner, so I have not one thing to “compare” the latest Kindle to. I don’t own a Nook. I don’t own an iPad (and, in any case, that’s comparing apples to oranges). I don’t have a Sony e-reader. ‘

This will be a short, simple review.

I received my Kindle with regards to a week ago and haven’t been competent to put it down.

Things I like regarding my Kindle?
1. The e-ink display is amazing.
2. Using the 5-way controller is simple and effective.
3. Page turn speeds are more immediate than I thought they would be.
4. It’s lightweight, even with the attached cover (I have an Amazon cover with a built-in light)
5. Page-turning buttons are quiet and well-placed.
6. Recharge time is fast.
7. I may order a book and get started reading it in less than 60 seconds. Nice!
8. Portability… I may take 3,000 books with me when I travel for work and not require further and added suitcases or baggage fees.

Things I’m not too keen on?
1. Buttons are too close together and are laid out oddly.
2. Lack of person number buttons is frustrating.
3. Power button on the bottom? Not a bad thing. Just an odd thing. (Same for the headphone input). I commonly rest the “bottom” of a book on my lap when I read.

Things I hope change in the future?
1. How books are organized… When I put a book in a collection (which is in truth a “tag”), it still appears in the main list. It’s not actually “moved”, it’s plainly associated.
2. The look of the main screen. I’d like “folders” or some other way to display “collections”.
3. Ability to create personal “screen savers.”
4. E-book pricing, though Amazon has little control over this. Still, most titles are the same price as or less than their hardback/paperback counterparts. (And I’m not opposed to paying more for comfortableness and portability).

Things that don’t bother me in regards to other reviews?
1. The browser is experimental. Amazon has developed a devoted e-reader, and it’s meant to be used to read. Period. Not browse the web. If you want to browse the web, get a computer — not an e-reader.
2. The Kindle is not an mP3 player, either. Yes, it’s nice to have a good deal of classical music playing in the background while I read, but I don’t need to see the title of the song, album art, etc. (And you may skip from track to track on the Kindle using shortcut keys).
3. Lack of a “color” or “touch” screen.

In summary, for $139, I’m rather thrilled with my buy and have arleady read multiple books on it. In fact, I think I’ve read more in the past week than I’ve read in the past month.

1530 of 1555 humans found the following review helpful.
A hesistant buyer rejoices on his choice
By Mr Goodwrench
I researched the buy of a Kindle for a long time. I couldn’t determine whether or not it was worth buying a consecrated e-reader. Boy am I glad I made this purchase. The downside to Amazon’s online selling of Kindle 3 is that the clients don’t get to see it in person. It is much better in person. This may sound stupid, but when I got my new Kindle, I thought there was a stuck-on overlay on the screen containing a diagram of the unit’s buttons, etc. I genuinely tried to peel it off. Doh! The e-ink on this unit is THAT good. I didn’t realize that I was staring at the actual display. I likewise didn’t realize that no power is required until the display changes. (thus the outstanding battery life) I do a lot of reading, but was facing the probability of reading less or buying big type books because of my variable and deteriorating eyesight. The new Kindle has been a godsend. Now, I may determine the size of type I need depending on my level of fatigue amid other things. The weight and ergonomics are very good. For someone, like me, with neuropathy in his hands, it is exceedingly easy to manage and pleasurable to own. To me, it is more comfortable to read than print books. The ease of navigation is great as is the speed. The battery life, so far, has been extraordinary. It without apparent effort connected to our home Wi-Fi, which by design does not broadcast an SSID. It downloads books so fast that I almost thought they were not altogether received. I did not buy the 3G version because of the price divergence and the fact that there is no coverage where I live. If you are not constantly traveling, I don’t see the need to spend the extra bucks, but that is a matter of personal choice. For those who have no Wi-Fi at home, do not forget that you may always download the material to your computer and transfer it by way of USB. Just today I was observing an consultation with Tony Blair on TV. He was talking when it comes to his new book, which sounded interesting. I picked up the Kindle and downloaded a free sample before the consultation was over. I have only read the preface so far, but will in all probability buy the book. Now THAT is a outstanding way to buy a book! I haven’t used online browsing extensive yet, but find it reasonable for what the device is. This is primarily a book reader, not a laptop or notebook. They are outstanding for what they do, but can’t match the e-ink display, or the light weight. For those of you worrying in regards to the wait for the new Kindle, let me end with, “It is worth the wait” This new Kindle is all in regards to the quality of experience. There are a good deal of format selections for electronic reading. If you want the best experience, go with the Kindle.

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These days it seems investors are looking for safety and security more than ever, especially after the major stock market correction witnessed from 1999-2002. Four years later, numerous brokerage and variable annuity accounts still have not recovered their losses from that time period. Unfortunately, many investors were counting on those funds to provide income during their retirements.

Thus the introduction of the equity indexed annuity, or EIA, to the main stream marketplace. Designed to provide a greater return than the traditional fixed annuity, the equity indexed annuity can be a reliable alternative to a brokerage account. Only fifteen years old, several billion dollars have been deposited into these accounts.

Annuities in General

First, a potential investor should have a little background information. Generally, an annuity functions in the following manner: The investor, usually called an owner or annuitant, agrees to deposit funds with an insurance company for a specified period of time, say 7 years. The annuity is said to be in deferral during that period of time. While in deferral, most annuities will allow for partial distributions of interest gains or a yearly 10% free withdrawal or the required minimum distribution mandated by the I.R.S. (Many annuities allow for larger distributions if the owner is confined to a nursing home or is terminally ill.) Still another way to distribute annuity dollars is through a systematic withdrawal, referred to as an annuitization, based on a pre-determined schedule, say 5 years. However, if the consumer decides to take the entire contract out as a lump sum before the annuity has matured, then penalties are invoked based on the surrender schedule in the annuity contract. If the investor passes away, the lump sum of the annuity is paid to a beneficiary at passing unless other arrangements have been made.

Technically, equity indexed annuities are characterized as fixed annuities by the various Departments of Insurance in each state. That is to say, at no point does the investor ever own any variable type of security like a stock, bond or mutual fund within the EIA account. These accounts do not fluctuate in value like a variable annuity might. Yet the equity indexed annuity is not like your typical fixed annuity either.

The Equity Indexed Annuity Advantage

What makes EIAs different than a traditional fixed annuity is how interest is credited to the account. Typically, the insurance company will buy an option in a particular index like the DOW, S&P 500 or the NASDAQ. After a period of time, usually one year, the option contract comes due. One of two things will then occur. If the market index has advanced, the option is cashed in and interest is credited to the annuity principal. Conversely, if the market has retreated, the option expires and no interest is credited to the account for that year.

In practice, the annuity either gains or maintains value each year, but the investment cannot lose value due to negative market fluctuation. (It is also important to note that all EIAs have a minimum guarantee associated with their returns. For example, this guarantee might state that if the market declines every year over the life of the annuity, the insurance company will guarantee payment of 2% on 88% of the premium deposited. However, it is practically unheard of for this safety feature to be utilized.) Investors should also know that most equity-indexed annuities have a fixed interest account as an additional investment option. When interest rates are high and the stock market is in decline, the fixed account might be used to credit interest to the annuity principal.

Equity Index Performance

How do these annuities perform? Historically many of these accounts have averaged returns of 7% or better. In years when the broader markets have performed well so have EIAs. It is not uncommon for investors to enjoy interest payments during these prosperous years of 10-20% or better. But the crucial value of these accounts is realized during rapid market declines, when the equity indexed annuity will maintain its principal as well as interest gains from past years.

These facts may explain the recent popularity of EIAs, especially among retirees looking to preserve a lifetime’s worth of hard work. With the market advancing and declining so rapidly, many consumers are looking for safety and security without having to sacrifice reasonable interest returns. Granted, these annuities will not return 50% in one year, like a fortunate stock or fund pick might, but the peace of mind investors gain knowing their investment cannot decline has many placing a portion of their retirement funds into these accounts.

How Does An Annuity Work

Few individuals have done more to educate the American public about financial scams than Jay Adkisson. As the creator of Quatloos.com, Jay has helped many thousands of people worldwide avoid being scammed out of many millions of dollars to various investment schemes. The U.S. Senate Finance Committee has twice called Jay as an expert witness on abusive tax schemes. As one of the authors of Asset Protection: Concepts and Strategies (McGraw-Hill 2004), Jay has similarly helped thousands of people avoid dubious asset protection schemes.

In his latest book, Equity-Indexed Annuities: The Smart Consumer’s Guide, Jay gives a balanced and objective overview of this advanced form of fixed annuity to better educate consumers of the advantages, disadvantages, and the numerous product options that are available when considering the purchase of this popular retirement vehicle.

This short guide covers all the most important issues that consumers should address before purchasing an equity-indexed annuity, including:

About the AuthorJay D. Adkisson is an investment consultant and attorney. He is best known as the creator of Quatloos.com which is an internationally famous website that educates the public about financial and investment scams and tax frauds. Jay has twice been an expert witness for the U.S. Senate Finance Committee, and is one of the authors of Asset Protection: Concepts and Strategies (McGraw-Hill 2004) and the author of Lost Eye: Coping with Monocular Vision after Enucleation or Eye Loss from Cancer, Accident, or Disease (2006).

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How Does An Annuity Work Picture

Most helpful customer reviews

23 of 23 people found the following review helpful.
Concise and Objective
By Shark Diver
Bought after having read about it in Jay’s newsletter. This is a guide that every insurance agent who sells EIAs should read, and every person who is interested in purchasing EIAs should read — there would be no more improper or unsuitable sales, and those people who could benefit by them can do so without worry.

2 of 2 people found the following review helpful.
Excellent Book Overall
By Jeff Clark
This book is a very balanced explanation and review of the Indexed Annuity landscape. While some criticisms are not applicable to all products this small book does a very credible job of getting all the important issues on the table. I recommend this book to all that would like to learn more about this savings vehicle. Jeff Clark CPA

1 of 1 people found the following review helpful.
Easy Read
By Michael D. Wolf
I was looking for a good reference guide for my clients. This book was very easy to read and understand, I would highly recommend this for anyone who wants to understand EIA’s.

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