How Indexed Annuities Work and Who Should Consider Them
Many people approaching retirement want market growth but fear the risk of loss. That’s where fixed indexed annuities (FIAs) offer a unique balance. FIAs are insurance products that credit interest based on the performance of a market index—like the S&P 500—while guaranteeing your principal won’t lose value due to market downturns. You benefit from a portion of the upside with none of the downside risk.
Unlike variable annuities, FIAs are not invested directly in the market. Instead, your gains are calculated using crediting methods such as caps, participation rates, or spreads. This structure provides a way to enjoy some growth when markets are strong—while maintaining protection when they’re not. It’s a great middle ground for pre-retirees and retirees seeking stability and upside potential.
FIAs often come with optional income riders that provide guaranteed lifetime income, making them a powerful tool for retirement income planning. These riders grow based on a separate income calculation—sometimes including bonuses or rollups—allowing you to secure future income even if the index underperforms.
At Diversified Insurance Brokers, we help you compare indexed annuities across multiple carriers to find the structure, rate, and rider options that best fit your retirement goals. We break down the details so you understand how your annuity works before you ever sign.
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