Fixed Indexed Annuities
Fixed Indexed Annuities: Terms, Costs & Options
Explore how fixed indexed annuities work, including index-crediting terms, costs, limitations, and any optional guarantees.
What Is a Fixed Indexed Annuity?
A fixed indexed annuity is a contract with an insurance company that credits interest based on the performance of a market index, without directly investing your money in the market. For a deeper look at safe money strategies and full retirement income planning, visit our retirement planning partner, Prosperity Services Group.
Contract Features to Review
Index-Linked Interest Floor
A contract may set a floor for index-linked interest credits. That does not guarantee the contract value can never decline: fees, withdrawals, and surrender charges may reduce value. Check the contract for its floor and other terms.
Growth Potential
Interest may be calculated using an external index, subject to contract limits such as caps, participation rates, spreads, and crediting periods. You do not invest directly in or receive the full return of the index.
Tax-Deferred Growth
Earnings in a nonqualified annuity are generally tax-deferred until distributed; withdrawals may be taxable, and qualified annuities follow the tax rules of the underlying retirement account. Consult a tax professional about your situation.
Optional Income Features
Some contracts offer an optional income rider for an additional cost. Eligibility, payout calculations, limitations, and guarantees depend on the rider and issuing insurer; review the contract and rider details.
Ready to Talk About Your Retirement Income?
A conversation does not establish suitability or guarantee approval or a particular result. Review the specific contract, fees, surrender terms, and alternatives before making a decision.
Fixed indexed annuities are insurance contracts, not direct investments in an index. Any guarantees depend on the issuing insurer’s claims-paying ability and the contract terms. A zero index-credit floor does not eliminate fees, withdrawal effects, or surrender charges.
Reviewed by Kayla Price
Licensed Insurance Agent | NPN: 18530055
Licensed in NC, SC, GA, FL, VA, MD, MI, KS, TX, OH
Last reviewed: October 2026