Fixed-Indexed Annuities

A fixed-indexed annuity (FIA), also referred to as an equity-indexed annuity (EIA), can be described as a hybrid of a fixed annuity and a variable annuity, having some characteristics of both, and falling in between regarding the potential for return and level of risk.

With a traditional fixed annuity, the annuity issuer guarantees both the rate of return and the payout. Investors in fixed annuities elect safety of principal and guaranteed returns over market risks and the potential for higher returns.

With a variable annuity, on the other hand, the rate of return varies according to the performance of the investments you choose from those offered by the issuer (these investments are called subaccounts). With the exception of a guaranteed subaccount, variable annuities don't offer any guarantees on the performance of the subaccounts. You assume all the risk related to those investments--including the risk that you may lose principal. In return for assuming a greater amount of risk, investors in variable annuities have a greater potential for growth in earnings.

Fixed-Indexed Annuities take the middle ground, offering no downside risk (when the contract is held to maturity) balanced by limited upside potential for returns. They offer safety of principal, and generally a minimum rate of return. Fixed-Indexed Annuities also offer the potential for higher returns by tying interest paid to the performance of a stock index.

Fixed-Indexed Annuities offer the same benefits as traditional fixed annuities, including:

• Safety of principle
• Guaranteed minimum returns
• Potential for higher index-linked returns
• Tax-deferred growth
• No annual contribution limits
• Guaranteed death benefits for beneficiaries
• No mandatory distributions after age 70 1/2
• Option of guaranteed income for life through GLWB riders and/or annuitization
• Limited penalty-free annual withdrawals

If you think that an indexed annuity might be right for you, please contact us for a copy of Annuities In Retirement Income Planning and our Indexed Annuity Buyer's Guide.