What is a fixed indexed annuity (FIA)?
A fixed indexed annuity is a fixed annuity that has an interest rate formula linked to an external index. The annuity owner chooses the interest crediting strategy for their annuity. Depending on the chosen strategy, they will know exactly how the interest on their annuity will be calculated and the potential interest they may receive on the annuity for that year. Like a fixed annuity, the value of the underlying fixed indexed annuity can never decrease due to index performance. Fixed indexed annuities have interest crediting strategies linked to market indexes. However, money in the actual fixed indexed account is not invested directly in the market, as is the case with variable annuities. Therefore, you should never state that a prospective buyer is making an investment when purchasing a fixed or fixed indexed annuity. The customer is simply purchasing a fixed indexed annuity for the purpose of accumulating or saving dollars for retirement, with the option to turn those dollars into
