A fixed annuity pays a guaranteed interest rate for a set period, similar to a certificate of deposit. A fixed indexed annuity credits interest based on a market index, with a floor that protects your principal from market losses and a cap or participation rate that limits gains. Both grow tax-deferred.
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How does a fixed annuity work?
You deposit money with an insurance company, which guarantees a rate for a set term. Your balance grows tax-deferred until you withdraw it.
It is simple and predictable, which suits savers who want certainty.
How does a fixed indexed annuity work?
Interest is linked to the performance of an index, such as a stock market index, but you are not invested in the market directly. In down years, your credited interest is typically zero rather than negative.
Caps, spreads and participation rates limit how much of the index gain you receive.
Want to compare your options?
We shop several carriers so you can see real prices side by side.
Which one fits your retirement plan?
If you value a known return, a fixed annuity is straightforward. If you want more growth potential while protecting principal, an indexed annuity may fit.
Surrender periods and fees matter for both. We explain the terms clearly before you decide.
Frequently Asked Questions
Can I lose money in a fixed indexed annuity?
Market losses do not reduce your credited value, but early withdrawals can trigger surrender charges.
Are annuities taxed?
Growth is tax-deferred, and withdrawals of earnings are taxed as ordinary income. Talk with your tax advisor.
How long is a typical surrender period?
Many annuities have surrender periods of several years. Check the contract before you buy.
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