A Different Kind of Retirement Tool
A fixed indexed annuity (FIA) is a contract that calculates interest credits using an external index and contract terms. Some contracts offer optional income features. Product classification depends on the specific contract; some indexed annuities are securities. Guarantees depend on the issuing insurer’s claims-paying ability and are not FDIC or government guarantees.
How the “Indexed” Part Works
Your FIA’s growth is typically calculated using a formula tied to a market index like the S&P 500, subject to a cap, participation rate, or spread set by the insurance company. If the index goes up, your account can be credited growth up to whatever limit your contract specifies. Some contracts apply a floor to index-linked interest, but that does not guarantee the contract value cannot decline: withdrawals, charges, surrender provisions, or other adjustments may reduce value. Review the contract’s formula and terms.
Why Pre-Retirees Consider FIAs
Some people approaching retirement compare FIAs with other options when evaluating interest credits, income features, access to funds, and risks. Optional riders or payout choices may provide payments under contract terms; they are not automatic and may carry charges.
What to Understand Before Considering One
- Surrender provisions. The period, charges, and any withdrawal amount available without a surrender charge vary by contract. Consider liquidity needs before committing.
- Caps and participation rates aren’t fixed forever. Insurance companies can adjust these annually within the terms of your contract, which affects how much upside you actually capture in a given year.
- Rider terms and costs. Optional riders may carry charges and conditions; check how they affect contract value, income, and withdrawals.
- Time horizon. Compare the contract’s surrender provisions with when you may need the funds; an FIA may not fit short-term savings or emergency money.
Is an FIA Right for You?
Whether an FIA fits depends on your financial picture, time horizon, liquidity needs, other income, contract terms, charges, and alternatives.
Have questions? Schedule a free review with Kayla Price, a licensed insurance agent at Price Services Group. Call 866-648-1578 or visit priceservicesgroup.com/schedule.
Price Services Group, LLC is not affiliated with or endorsed by the U.S. government or the federal Medicare program. NPN: 18530055 | Agency NPN: 20387435