When you're looking for growth and principal protection

A fixed indexed annuity is a tax-deferred, long-term savings option that provides protection for your original deposit when the market goes down, combined with an opportunity for growth. It gives you more growth potential than a fixed annuity along with less risk and less potential return than a variable annuity.

Returns are based on the performance of an underlying index, such as the S&P 500® Composite Stock Price Index, a collection of 500 stocks intended to provide an opportunity for diversification and represent a broad segment of the market. While the benchmark index does follow the market, as an investor, your money is never directly exposed to the stock market.

More about fixed indexed annuities

For more information about fixed indexed annuities, check out our video

What are the benefits?

Tax deferral

Its tax-deferred status allows you to benefit from compounded growth.

Principal protection

The original deposit will not decline if the index performs negatively. Please keep in mind, though, that all guarantees are subject to the claims-paying ability of the issuing insurance company.


Growth potential can be achieved through the performance of the index or through a fixed interest rate earned on the fixed account — or a combination of the two. Your investment professional can help you find the best combination for you.

Lifetime income

A rider is often available for an additional cost to guarantee set payments regardless of how long you and your spouse (if elected) live. Or, get lifetime income through annuitization at no additional cost.

Earnings credited

At the end of each term, earnings are credited; at that point, they may be affected by negative index performance. Earnings can, however, be limited by the policy's spread or cap rates. Some carriers may offer a feature that allows you to take advantage of index highs during your term.

Beneficiary protection

You can pass assets to beneficiaries and avoid costly probate. Optional riders, available for an additional cost, can enhance the amount your beneficiaries may receive.

Enhanced death benefits

Most companies offer spousal continuation only upon the first spouse’s death and don’t pay a death benefit out until the second spouse passes. However, some carriers do offer a joint option that may cover the death of either spouse upon the first passing.

What should you consider before purchasing?

Gains can be limited

With this type of annuity, gains can be limited by elements such as participation rates, caps and interest. However, this product does have some protection from down markets.

Complexity of plans

The jargon for fixed indexed annuities can be tough to understand, so your financial professional can guide you. The following can help:


To offer you both growth opportunity and principal protection, some fixed indexed annuities have a maximum rate, or cap, on your gains.

If the cap is... and the index performance is... your contract value increases by:
5% +8% 5%
5% +5% 5%
5% -3% 0%

Participation rates

The participation rate is how much of an index increase you actually receive. The higher your participation rate, the more of an index performance you’ll receive.

If the index performance is... and your participation (par) rate is... your earnings will be:
10% 80% 8%
5% 80% 4%
20% 50% 10%

Fee (also margin or spread)

The fee is generally subtracted from the earnings.

Here's how it all works together:

Index performance Your participation rate Your earnings Fee Your earnings after fee deduction
12% 75% 9% 2% 7%
5% 80% 4% 2% 2%
-5% 80% 0% 2% 0%

Fixed indexed annuities are contracts purchased from a life insurance company. They are designed for long-term retirement goals. Withdrawals are subject to income tax, and withdrawals before age 59½ may be subject to a 10% early withdrawal federal tax penalty.

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An annuity is a contract you purchase from an insurance company, designed for long-term investing. The values will fluctuate based on investment option performance. Annuities have restrictions and limitations, and fees and charges will vary based on the product. You may be charged a penalty if you take your money out early. Withdrawals may be subject to ordinary income taxes, and if you are under age 59½, you may pay a 10% federal tax penalty. Please remember that investing involves risk, including possible loss of principal. All guarantees and protections are subject to the claims-paying ability of the issuing insurance company.