Phil Cannella explains that not all annuities are created equal and that indexed annuities have many moving parts. It is important for a consumer to understand these parts and what to expect. What upsets Phil Cannella is hearing consumers complain when their financial advisor did not adequately explain the annuity they purchased, leaving them confused and caught by surprise when they don’t make the expected gains. Phil Cannella explains that the only way to avoid this confusion is to receive a thorough education on the various features in an annuity so that that people completely understand it. One such feature is the “participation rate” which Phil Cannella explains as follows:
“The participation rate decides how much of the increase in the index will be used to calculate index-linked interest. For example, if the calculated change in the index is 9% and the participation rate is 70%, the index-linked interest rate for your annuity will be 6.3% (9% x 70% = 6.3%). A company may set a different participation rate for newly issued annuities as often as each day. Therefore, the initial participation rate in your annuity will depend on when the company issues it. The company usually guarantees the participation rate for a specific period (from one year to the entire term). When that period is over, the company sets a new participation rate for the next period. Some annuities guarantee that the participation rate will never be set lower than a specified minimum or higher than a specified maximum.”
Phil Cannella is a true expert when it comes to the subject of insurance. Having worked in the industry for almost forty years now, specializing in those types of insurance products that cater to the senior market, Phil Cannella can truly be called the consummate insurance professional. Phil Cannella’s focus is working with retirees, and those approaching retirement, to educate them on the “ins and outs” of the products that can help them. A Crash Proof Education is the way to ensure that his clients make informed decisions for themselves, and understand indexed annuities and the “participation rate.”