Is an Indexed Annuity fixed or variable?

The Annuity Man

Fixed Index Annuities (FIAs) are fixed annuities issued by life insurance companies.  FIAs are not securities, and it only takes a life insurance license to sell Fixed Index Annuities (FIAs).

Fixed Index Annuities (FIAs) are typically sold with attached benefit riders to the policy.  You can only attach a rider at the time of application.  The most typical rider attached is what's called an "Income Rider."  An income rider is a future income benefit that you can start the payments at a future date, and those payments are guaranteed for as long as you live.  Income riders typically come with an annual fee that is deducted from the accumulation value for the life of the policy.

Fixed Index Annuity (FIA) accumulation values are typically based on 1 year call options on an index like the S&P 500.  Those call options on the S&P 500 do not include dividends, which typically represent over 50 percent of the S&P 500 returns.  FIAs were developed and introduced in 1995 to compete with CD returns, and that is exactly the return range they have produced since inception.

Too many Fixed Index Annuities (FIAs) are sold using high pressure sales tactics, food seminar events, or misleading radio and television advertising.  The sales message unfortunately goes largely unregulated.  FIAs are regulated at the state level, so national type promotions run under the oversight radar screen. 

Be sure to do your homework before buying a Fixed Index Annuity (FIA), and always make sure to base your buying decision on the contractual guarantees of the policy.

You can contact Stan if you have any questions or want to see quotes on your specific situation.


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