The CUNA Zone Annuity is an insurance contract that offers both index-linked returns and a limit on market losses. With Zone, you set your own risk/reward zone — your upside potential and the level of protection you’re comfortable with on the downside.
These upside and downside limits are connected.
We’re part of a growing global investment marketplace that seems wildly unpredictable. Investing for retirement may mean exploring the growth opportunities of the stock market while recognizing the very real possibility for dramatic loss.
Today, geopolitical events can create optimism one moment and anxiety the next. Economic news seems to favor small companies, then large. The technology sector can see meteoric rises and steep declines.
Welcome to the new normal of market volatility.
Interest rates can impact so-called “safe” investments and may make it difficult to earn a reasonable return.
As an alternative to the volatility of stocks, many investors choose bonds and certificates of deposit (CDs) for portfolio stability.
But neither is without risk.
A risk associated with bonds involves the inverse relationship between bond prices and interest rates.
Over time, if interest rates rise, bond values typically go down.
And the longer the term of the bond, the greater the risk of decline.
In today’s historically low rate environment, CDs don’t offer much opportunity for growth.
When you consider the impact of rising costs and taxes, your real rate of return on a CD may even be negative.
Most of us are living longer, more active lives, but often without the pension plans of the past.
Life expectancy has increased dramatically over time, adding nearly two years to average lifespans since the year 2000.
Not only are we living longer, but a bigger part of our lives is also spent in retirement.
Today, most people will retire without the pension their grandparents enjoyed.
Planning for the future means not only protecting your investments from market risks but also finding ways to ensure your savings will last.
Inflation steadily reduces the purchasing power of a retirement nest egg. Inflation continuously impacts the price of the goods and services you buy, and over time it really adds up.
You must ensure your savings will be enough to keep pace with rising costs over the years — 20, 30, or more — that you’ll spend in retirement.
Your account allocation
When you purchase Zone, you decide how much of your payment to allocate to the annuity’s two risk control accounts. Each is linked to a market index for an initial index period, and each has its own range of possible investment performance.
- The Secure Account has a declared rate cap and a 0% floor. These dollars are safe from market downturns and receive modest growth potential.
- The Growth Account has a higher declared cap and a -10% floor. These dollars can experience limited losses if the market is down, but when it’s up they have more room to grow.
By blending your allocation to the two accounts, you set your personal comfort zone to control market risk and participate in market rewards. And you can reallocate between accounts each year, to adjust your zone as needs change.
Your Index-linked performance, with limits on loss.
Your annuity receives interest linked to the performance of the Standard & Poor’s 500 Index (S&P 500).
The S&P 500 tracks changes in market value for 500 major U.S. companies, and it is generally considered representative of the overall stock market.
Your earnings lock-in based on the annual point-to-point change in the S&P 500, from one contract anniversary to the next.
- If the S&P 500 goes up, you’ve credited the percentage increase, up to each account’s rate cap.
- If the S&P 500 goes down, the value in the Growth Account is reduced by the percentage decrease, but only down to the rate floor of -10%. Value in the Secure Account — because it has a 0% floor — remains the same.