Frequently asked questions for FIAs

Fixed index annuities (FIAs) are simply contracts with an insurance company. In exchange for one or more purchase payments, they provide specific guarantees as described in the contract. FIAs generally have two phases: During the accumulation phase they offer tax-deferred accumulation potential, and during the income phase they provide guaranteed income – in some cases for as long as you live.

It means the money in your fixed index annuity contract is not at risk due to market losses. Although FIAs may credit indexed interest based on changes in an external index, you’re not actually participating in the market – so the principal in your annuity is never at risk due to market losses. Fees and charges may still reduce your annuity’s value, however.

Simply put, it’s interest your contract earns based on positive changes in an external index. We track the performance of one or more indexes you select, and if the return is positive, you have the opportunity to earn indexed interest. But remember that with fixed index annuities, you’re not actually participating in the market – so the principal in your annuity is never at risk due to market losses.

Indexed interest is determined through a combination of index allocation options and crediting methods. Every crediting period, you can place your cash value in one or more allocation options, which track the performance of an external index. If the external index has a positive result, we then use a crediting method – which is a formula to determine how much indexed interest your contract will earn. Because no single allocation or crediting method performs best in all situations, your financial professional can help you determine which combination may fit your financial goals.

An allocation option is an index combined with a crediting method.

Some FIAs emphasize accumulation, while others focus more on income – or even a combination of both. But some FIAs can be complex, so it’s best to work with a financial professional to confirm that an FIA makes sense as part of your overall retirement strategy.

Many people buy annuities between ages 40 and 60, but the answer depends on your financial goals. If your main goal is saving enough for retirement, buying a fixed index annuity when you’re still a few years away from retirement may be a good choice. That’s because FIAs are designed to help the money in your contract grow tax-deferred over time. And the younger you are when you buy your annuity, the longer your money has to grow tax-deferred.

That depends on many factors, including whether you have started taking income from your annuity. Most annuities let you name a beneficiary. If you have not yet started taking regular income payments from your annuity (we call this “annuitization”), the money that’s left in your annuity will pass on to your beneficiary when you die. But some annuities may have different terms. That’s why it’s important to read and understand the contract before you buy any financial product, including an annuity.