Who can benefit from Fixed Index Annuities? 

Fixed-indexed annuities are insurance products that can help you meet your long-term retirement needs by protecting the contract value from market fluctuations. In addition to protecting your principal, they provide tax deferral, and guaranteed lifetime income. Plus, your beneficiaries may receive the residual value of your fixed-indexed annuity contract as a death benefit.

Fixed index annuities (FIAs) are different from fixed annuities in how interest is credited. Rather than getting a set rate of interest, FIAs allow for interest to be credited, in part, based on positive changes in an external index. However, with an FIA, the contract does not directly participate in any equity or fixed income investments. You are not purchasing shares in an index.

So, who can benefit from a fixed index annuity?

There is not one single answer. FIAs can be valuable tools for a number of individuals. For those looking for benefits such as protection of contract value from market risk, competitive interest crediting, a source of guaranteed income and tax-deferral, then a FIA may make sense for you.

Remember, FIAs are designed to be long-term financial vehicles. They may be subject to surrender charges or holding periods, which vary by carrier and state. It’s important to have other assets available outside of a FIA for monthly expenses, emergency needs or other living expenses.

Purchasing a FIA is an important financial decision. Please discuss with a licensed insurance professional before making a purchasing decision. For a more complete discussion of FIAs, please click here (include hyper link to “Understanding FIAs” piece.)

Guarantees are backed by the financial strength and claims paying ability of the issuing carrier.

Distributions are taxed as ordinary income and, if taken prior to 59 1/2, a 10% federal tax penalty.