What Makes Fixed Indexed Annuities Different from Fixed Annuities?
Fixed annuities and fixed indexed annuities (FIAs) are both great options for conservative investors. They protect your principal, offer tax-deferred growth, and can generate guaranteed retirement income. But they differ in one key way: how your interest is calculated.
If you’re comparing options, it’s essential to understand these differences—because the right choice depends on your goals.
Fixed Annuities: Guaranteed Growth, Simple Structure
A fixed annuity offers a guaranteed interest rate for a set number of years—typically 3, 5, or 7. For example, if you invest $100,000 into a 5-year fixed annuity paying 5.40%, you’ll earn $5,400 annually, compounded. The rate is locked in, the returns are predictable, and there’s no market risk.
These are often used to preserve capital, avoid market volatility, and generate predictable income or accumulation.
Fixed Indexed Annuities: Market-Linked Potential, No Market Loss
A fixed indexed annuity ties your growth to a market index—like the S&P 500. If the index performs well, you earn interest based on a formula (with caps, spreads, or participation rates). If the market performs poorly, your account earns zero—but never loses value.
This gives you a blend of safety and upside potential. FIAs are great for long-term savers who want more growth than a fixed annuity—but without stock market risk.
At Diversified Insurance Brokers, we help clients compare side-by-side quotes, crediting strategies, and income rider options to find the annuity that fits their retirement plan best.
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https://www.diversifiedquotes.com/current-annuity-rates/
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