EXPLORE: IndexED Annuity

A Balanced Approach to Growth and Protection

An Indexed Annuity—also known as a Fixed Indexed Annuity (FIA)—is a type of insurance product designed to offer the potential for growth based on the performance of a market index (such as the S&P 500), while also providing downside protection and guaranteed income options in retirement.

Unlike variable annuities that directly invest in the market, Indexed Annuities do not invest your money in equities. Instead, your annuity’s growth is linked to the performance of an external index, with certain limitations such as caps, spreads, or participation rates. These features are designed to strike a balance between risk and reward—giving you the opportunity to earn more than a traditional fixed annuity without the full risk of stock market losses.

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1. Market-Linked Interest Potential (with Protection)
The interest credited to your annuity is tied to the movement of a market index, but your principal is not directly exposed to market losses. This means you can benefit from market upswings, but will not lose principal due to market declines (assuming no withdrawals are made during the surrender period and income riders are not activated with associated charges).

2. Principal Protection
Even in negative market years, your account will not lose value due to market downturns. This feature makes Indexed Annuities a favored choice among conservative investors seeking growth potential without market risk.

3. Tax-Deferred Growth
Earnings inside an Indexed Annuity grow tax-deferred. You won’t owe taxes until you begin taking withdrawals, which may help you grow your retirement savings more efficiently.

4. Lifetime Income Options
Many Indexed Annuities can be converted into a guaranteed stream of income for life—a feature known as annuitization. Alternatively, you may add an optional income rider for a fee, which allows income to begin at a later date while maintaining greater flexibility and access to funds.

5. Optional Riders
Some contracts offer riders (at an additional cost) to enhance benefits, such as lifetime income guarantees, enhanced death benefits, or long-term care features.

6. Surrender Periods and Charges
Indexed Annuities typically include a surrender charge period—a set number of years during which withdrawals may be subject to fees. It’s important to understand these terms before purchasing.

Indexed Annuities use crediting strategies to determine how much interest is added to your account. These strategies include:

• Participation Rate – The percentage of index gains you receive (e.g., 80% of index growth).
   
• Cap Rate – A maximum limit on index gains credited (e.g., a 10% cap means you can earn up to 10% even if the index grows by 15%).
   
• Spread Rate – A deduction from index gains before crediting (e.g., if the index gains 12% and your spread is 3%, you earn 9%).
   

Each insurance company offers different strategies, and some allow you to choose or reallocate among them each year.

Indexed Annuities may be suitable for individuals who:

• Seek moderate growth potential with principal protection
   
• Desire tax-deferred accumulation
   
• Want to ensure income in retirement
   
• Can commit funds for a period of time (typically 5 to 10 years)
   

However, they may not be ideal for those needing immediate liquidity or those uncomfortable with surrender periods and product complexity.

• Indexed Annuities are insurance products, not direct investments in the stock market.
   
• Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
   
• Interest credited is subject to the terms of the annuity contract, which may include caps, participation rates, and spreads that can change periodically.
   
• Early withdrawals may be subject to surrender charges and potential tax penalties if taken before age 59½.
   
• Optional riders are subject to additional costs, conditions, and restrictions.
   

Always review the product brochure, disclosure forms, and the annuity contract before purchasing. Consult with a licensed insurance professional or financial advisor to ensure the product aligns with your financial goals and retirement needs.

To learn more or to review available Indexed Annuity products tailored to your retirement goals, we invite you to:

• Explore carrier options through our Explore & Enroll Platform
   
• Speak with a licensed advisor for a personalized review

• Request and download our educational guide on Indexed Annuities

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