What is a RILA?  A Registered Index-Linked Annuity (RILA)—sometimes called a buffered annuity—is an insurance contract that links interest to a market index while exposing you to a limited amount of downside. Instead of a 0% floor like a traditional fixed indexed annuity (FIA), a RILA uses buffers or floors to absorb only part of a loss (e.g., the first 10%), while capping how much upside you can capture. Many retirees use RILAs for accumulation with risk control, then decide later whether to convert assets into income.

How a RILA Works (In Plain English)

• Index-linked growth: Your contract credits interest based on an index (e.g., S&P 500®) using a cap, participation rate, or spread.
• Defined downside: Choose a buffer (insurer absorbs the first X% of losses) or a floor (you absorb losses only down to a set limit). Losses beyond that are your risk.
• Term choices: Index periods often run 1–6 years. Your cap/participation and protection level typically reset each period.
• Account value risk: Unlike FIAs, RILA account values can decline in a down market if losses exceed your buffer/floor.
• Tax deferral: Growth compounds tax-deferred in non-qualified accounts; IRAs follow IRA rules.

RILA vs FIA (and Why FIA + Income Rider Often Wins for Income)

Both RILAs and FIAs cap upside. The major difference is the downside experience:

• FIA (fixed indexed annuity): Principal protection with a 0% floor—no market-loss reductions to account value from index declines.
• RILA: Partial protection only. Losses can reduce account value beyond the buffer or down to the floor.

If your primary goal is guaranteed lifetime income, a FIA with an income rider often provides a clearer, more reliable path:

• Certainty: Income riders specify age-based payout percentages applied to a benefit base—creating dependable, predictable paychecks.
• Control: You keep your account value for liquidity and legacy, while the income guarantee continues for life—even if the account later depletes.
• Behavioral comfort: A 0% floor helps many retirees stay invested through downturns, avoiding sequence-of-returns stress on income plans.

Bottom line: Use a RILA when you want more upside potential than a fixed rate and you’re comfortable with defined downside. Choose an FIA + income rider when your priority is guaranteed, durable income with principal protection during the accumulation phase.

Quick Comparison

Who Should Consider a RILA?

• Investors seeking more upside than a fixed rate and willing to accept defined downside.
• Pre-retirees with 5–10 year horizons who plan to evaluate income later.
• Allocators building a risk-tiered annuity sleeve alongside fixed annuities and FIAs.

When an FIA + Income Rider Is the Better Fit

• Your #1 goal is income: You want a reliable paycheck for life with clear payout factors.
• Downside comfort matters: A 0% floor helps you avoid selling low or pausing withdrawals in bad markets.
• Spousal needs: Joint-life rider options can secure income for both spouses.

FAQs: What Is a RILA?