Episode 006: What is a Fixed Index Annuity (FIA)?

The Annuity Man

Fixed Index Annuities (FIAs) were introduced in 1995 to compete with CD returns. FIAs are fixed annuities and life insurance products, not securities. FIAs are regulated at the state level, and a state life insurance producer license is all that is needed to sell the product. Fixed Index Annuities are not a security.

FIAs are fixed annuities that provide principal protection and CD (Certificate of Deposit) type returns. Multi-Year Guarantee Annuities (MYGAs) are also fixed annuities that provide principal protection and CD type returns.

FIAs can also provide a lifetime income stream through annuitization of the contract or by attaching an Income Benefit Rider to the policy at the time of application. Income Riders are for future income needs and are a separate calculation from the potential index return part of the Fixed Index Annuity contract.

Fixed Index Annuities (FIAs) are often over-hyped and misrepresented to consumers with too good to be true sales pitches like "market upside with no downside" or "market participation with principal protection." Both statements are not true. In addition, upfront signing bonuses to some FIAs are used as bait to get the sale. Upfront bonuses are just part of the overall contractual guarantee, and certainly not "free money."

Many FIAs are sold at annuity lunch type seminars or with misleading radio or TV ads that make the consumer believe the product is "too good to be true"....which it is not.

In this episode, The Annuity Man discusses:

  • What is a FIA and how it works
  • The history of FIAs
  • The benefits and limitations of a FIA
  • Where FIAs can fit in your portfolio

Key Takeaways:

  • FIAs were introduced in 1995 to compete with CD (not market) returns
  • Income Rider guarantees can be attached to most FIA policies
  • FIAs are life insurance products, not securities
  • Don’t base your buying decision on back-tested proposal returns 

Fun with Annuities Podcast is hosted by America’s Annuity Agent, Stan Haithcock, The Annuity Man. Hear brutal annuity facts with no sales pitches from the top independent agent in the country, licensed in all 50 states. Author of 7 books, Stan dives deep on all annuity types and strategies. It’s fun, learning the contractual truths on how annuities actually work and if they’ll fit your personal retirement lifestyle. Listen in on how you can be livin’ the reality, not the dream.

Listen on Stitcher, Apple Podcasts, and Spotify. Get the best and highest confinement care and enhanced benefit quotes using Stan's proprietary annuity calculators. You can also receive all 6 of The Annuity Man Owner's Manuals for free and under no obligation and see a live feed of the best fixed rates for your specific state of residence. 


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