Looking for growth without stock market losses—but don’t want to lock money up for a decade? Short term fixed indexed annuity options (typically 3–7 years) can protect principal, offer index-linked upside, and keep surrender periods shorter than traditional 10-year designs. This guide explains how short-duration FIAs work, when they fit, and how to compare them against fixed rate annuities (MYGAs) and CDs.

Check Short-Term FIA Designs & Income Options

Use the tool below to explore income rider illustrations and index choices. We’ll refine caps, participation rates, and term length in your personalized quote.

What Is a Short-Term Fixed Indexed Annuity?

A fixed indexed annuity (FIA) protects your principal from market losses and credits interest based on an index (e.g., S&P 500®) using caps, participation rates, or spreads. Short-term FIAs simply use a shorter surrender period—often 3, 5, or 7 years—so you keep flexibility while pursuing better crediting potential than a fixed rate annuity.

Short Term Fixed Indexed Annuity Options: Where They Fit

• Capital preservation with some upside: Avoid market losses while participating in a portion of index gains.
• Bridge strategy: Park funds for 3–7 years before converting to lifetime income or coordinating with Required Minimum Distributions.
• Diversification: Pair with fixed rate annuities (MYGAs) for rate certainty and FIAs for potential increases.
• Liquidity needs: Most contracts include free-withdrawal features (e.g., 10% annually) after year one—varies by carrier.

How to Compare Short-Duration FIAs

• Term length: 3, 5, or 7 years are common; availability varies by state.
• Index choices: Broad-market, volatility-controlled, and performance-trigger strategies; check caps/participation and reset rules.
• Crediting method: Annual point-to-point vs. monthly average; simple vs. compound rate mechanics.
• Fees: Base FIAs typically have no explicit M&E fee; optional income riders may carry a charge.
• Liquidity: Free withdrawals, Required Minimum Distribution waivers, and nursing-home/terminal-illness riders.
• Company strength: Review AM Best ratings and financials.

Short-Term FIA vs. MYGA vs. CD

Can You Add an Income Rider on a Short-Term FIA?

Sometimes. Many income riders (GLWBs) are designed for 7–10 year terms, but some 5-year contracts support riders. A common approach is to use a short-term FIA for principal protection and growth, then evaluate lifetime income options later. We’ll quote both approaches for you.

Design Tips for Short-Term FIA Buyers

• Balance indices: Split allocations across 2–3 strategies to diversify cap/participation risk.
• Mind resets: Annual reset can lock in credited gains while protecting against next-year declines.
• Know the surrender grid: Ensure the schedule matches your time horizon; consider laddering multiple terms.
• Coordinate taxes: Use non-qualified or IRA assets strategically; growth is tax-deferred in either case.

FAQs: Short-Term Fixed Indexed Annuities