Close this search box.

Basics of a Fixed Index Annuity

Fixed Index Annuities (FIAs) continue to make a larger & larger splash in the annuity market as alternatives to Traditional Fixed/Variable Annuities.

But First, WHAT IS AN FIA?

An FIA is a tax-deferred long-term saving option that offers interest crediting strategies that can provide downside market protection and the opportunity for growth in an up market. Interest crediting for index-based strategies are based on the performance of the underlying index. However, since an FIA is an insurance contract, clients are never directly invested in any index, registered security or stock market investment.

Fixed Index Annuities are now being used by clients who in the past may have simply used a Traditional Fixed Annuity for 2 MAIN REASONS:

  1. FIAs provide downside market protection
  2. FIAs create the opportunity for more upside potential via their index-based strategies

We are seeing the same trend with FIAs being used as a guaranteed lifetime income solution, as an alternative to variable annuities:

  • FIAs provide downside market protection
  • FIAs income benefits often have much lower fees than the high annual fees associated with VAs
  • FIAs often use a fixed income roll up, which gives your client more certainty around what their guaranteed lifetime income will look like

MYTHS pertaining to Fixed Index Annuities:

  • Long surrender charge periods?  THING OF THE PAST
  • High fees?  THING OF THE PAST
  • Complicated index strategies?  THING OF THE PAST

For more info on how you can implement Fixed Index Annuities into your retirement income planning, please reach out to our VP of Annuity Distribution, Steve Dunn @ 973-435-3784.