Fixed index annuities: Guarantees plus accumulation potential

A fixed index annuity can offer you retirement income solutions

The effects of rocky equity markets – along with interest rates touching modern-day lows – have left a large number of people wondering how to prepare for retirement. While equity investing can play an important role in building retirement assets due to the potential for higher returns, equity investing carries with it the risk of losses. Some fixed interest vehicles can provide protection against loss of principal but offer low rates. Between equity investing on one end and fixed interest vehicles on the other, many people consider the fixed index annuity (FIA) an important option for a portion of their money when planning for their long-term retirement needs.

An FIA guarantees principal protection from market downturns, including any credited interest, while offering the potential to earn interest based on changes in one or more external market indexes of your choice. When you buy an FIA, you own an insurance contract – you are not buying shares of any index, any stock, or bond investments, so your principal is never exposed to market risk. FIAs are unique in their ability to offer you the potential for indexed interest accumulation without sacrificing guarantees to your principal. Keep in mind that FIAs, like all annuities, are subject to surrender charge schedules, so you could lose money if your surrender your contract early.

FIAs allow you to link interest crediting to one or more external market indexes, and some also offer a fixed interestthree circles option, along with the ability to adjust allocations periodically. While you may not receive indexed interest when the market index goes down, the value of your FIA, including any previously credited interest, does not go down when a market index declines. The typical FIA places some type of limit (cap) on interest credited when the market index goes up over a specified time period – annually or monthly. Once interest is credited, it is locked in whether future market index performance is positive or negative.


With features that provide potential interest accumulation, while offering a way to avoid potential loss of principal – isn’t it time you considered whether an FIA is right for you?