Already Have An Annuity? Find out if its still the right one for you today...take the quiz now →
    Institute of Financial Wellness
    The Annuity FinderPowered By The Institute of Financial Wellness
    ← Back

    Types of Annuities

    Fixed Indexed Annuities Explained

    Fixed indexed annuities give you the chance to earn interest tied to a market index — without putting your principal at risk in a market downturn.

    Retiree reviewing market index performance on a tablet
    Fixed indexed annuities link growth to an index while protecting principal from loss.

    What Is a Fixed Indexed Annuity (FIA)?

    An FIA credits interest based on the performance of an index (like the S&P 500), subject to a cap, participation rate, or spread. You don't actually invest in the market — your principal is protected from market loss by the carrier.

    How Growth Works

    If the index goes up, you receive a portion of the gain up to a limit. If the index goes down, you receive zero — but you don't lose money. This 'floor' is the defining feature of an FIA.

    Why People Buy FIAs

    FIAs appeal to retirees who want growth potential greater than a fixed annuity, but who can't tolerate the emotional and financial impact of market losses near or during retirement.

    Common Misconceptions

    FIAs are not stock market investments, and they typically won't fully match the market in strong years. They're designed for principal protection with moderate, smoothed growth — not maximum upside.

    Who They May Fit

    Pre-retirees and retirees seeking a balance between safety and growth, especially those exposed to sequence-of-returns risk in their early retirement years.

    Related reading

    ← Back