Fixed Annuities vs Fixed Indexed Annuities
When building a retirement strategy, many people look for safe growth and guaranteed income. Two of the most popular options are fixed annuities and fixed indexed annuities (FIAs). Both protect your principal and provide predictable income options, but they differ in how interest is credited and how much growth potential you can expect. At Diversified Insurance Brokers, we help you compare fixed vs. fixed indexed annuities side by side to see which is the right fit for your long-term goals.
Compare Fixed & Indexed Annuities
Find the right balance of safety, growth, and guaranteed retirement income.
How Fixed Annuities Work
A fixed annuity functions much like a certificate of deposit (CD), but with higher yields and the benefit of tax-deferred growth. You receive a guaranteed interest rate for a set term—anywhere from 2 to 10 years. At the end of the term, you can renew, withdraw, or convert the annuity into a stream of guaranteed income. Fixed annuities are ideal for conservative savers who want certainty and stability.
How Fixed Indexed Annuities Work
A fixed indexed annuity also guarantees your principal but links interest growth to the performance of a market index such as the S&P 500. While growth is subject to caps, participation rates, or spreads, FIAs often provide higher upside potential than a traditional fixed annuity—without direct stock market risk. This makes them attractive for savers who want growth opportunities alongside safety.
Side-by-Side Comparison
| Feature | Fixed Annuity | Fixed Indexed Annuity |
|---|---|---|
| Principal Protection | ✅ Yes | ✅ Yes |
| Interest Crediting | Guaranteed fixed rate | Linked to index performance (with caps/participation) |
| Growth Potential | Predictable but modest | Greater potential with index-linked credits |
| Risk Level | Very low (no market exposure) | Low (principal protected; returns vary by index) |
| Liquidity | Limited; penalties may apply for early withdrawal | Limited; penalties may apply, plus indexing rules |
| Best For | Conservative savers wanting steady returns | Savers seeking more growth without full stock market risk |
Which Option Fits Your Retirement?
Deciding between a fixed and a fixed indexed annuity depends on your financial priorities:
- Fixed annuity: Best for those who value certainty and guaranteed rates.
- Fixed indexed annuity: Best for those willing to accept variable credited interest in exchange for more growth potential while keeping principal safe.
Our advisors can help you model both side by side so you understand how each product impacts your retirement income.
Why Work With Diversified Insurance Brokers?
Since 1980, Diversified Insurance Brokers has guided thousands of retirees through annuity decisions. As an independent fiduciary firm, we compare products from 75+ A-rated carriers to secure the best combination of rates, benefits, and income guarantees. From simple fixed annuities to advanced annuities with long-term care benefits, we’ll tailor a strategy that fits your retirement plan.
Find the Right Annuity for You
Compare fixed and indexed annuities to see which option aligns with your retirement goals.
FAQs: Fixed vs. Fixed Indexed Annuities
Are fixed annuities and fixed indexed annuities safe?
Yes. Both protect your principal from market losses. The main difference is how interest is credited—fixed rates vs. index-linked credits.
Which offers higher growth potential?
Fixed indexed annuities usually offer more upside than fixed annuities, though growth is limited by caps or participation rates.
Can both provide lifetime income?
Yes. Both types can be annuitized or paired with an income rider to guarantee income for life.
Are there penalties for early withdrawals?
Yes. Both types have surrender schedules, typically 5–10 years. Withdrawals beyond the free allowance may trigger fees and tax penalties before age 59½.
Which is better for conservative investors?
A fixed annuity provides guaranteed, predictable interest and is ideal for conservative savers. FIAs suit those who want more growth while still avoiding direct market risk.
