Annuities

Fixed annuities, unlike variable annuities, offer a guaranteed minimum rate of return. You are paid a guaranteed fixed amount that doesn’t vary, regardless of market swing. The insurance company assumes the risk.

FIAs guarantee a fixed rate of return, regardless of market swing; whereas the rate of return for variable annuities depend on the stock, bond, or money market investment. The insurance company assumes the risk for FIAs and the consumer assumes the risk with variable annuities.

An FIA uses a unique formula to calculate annual interest based on the performance of a stock, bond or commodity index. The index is used as a benchmark; however, you do not actually invest in it, offering balance and protection against the ups and downs in the market.

Your interest earnings rate always remains somewhere between the interest rate floor and the cap. Earnings won’t rise above the cap, even if the index goes higher. Earnings never fall below zero, even if the index goes way down.