Understand the contract
An annuity is a contract with an insurance company. Fixed annuities generally credit interest under contractual terms. Fixed indexed annuities use a formula linked in part to an external index. The formula can include caps, participation rates or spreads that limit credited interest.
Protection comes with conditions
A fixed indexed annuity is not a direct investment in a market index. Contractual protection is subject to insurer claims-paying ability and other terms. Withdrawals, surrender charges, market value adjustments or rider fees may reduce the amount you receive.
Consider income and access together
Before purchasing, understand the surrender period, penalty-free withdrawal provisions and optional income benefits. Review rider costs and tax consequences with qualified professionals. Annuities may be appropriate for some goals, but are not suitable for everyone.
For educational purposes only. Products and strategies vary by individual circumstances. Consult qualified legal and tax professionals where appropriate.
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