Fixed Indexed Annuities: Complete Guide to Protected Growth and Guaranteed Income

Key Takeaways

• Fixed indexed annuities protect your principal from market losses while allowing growth tied to stock market indexes like the S&P 500

• They provide guaranteed lifetime income options and shield your retirement savings from market volatility without requiring direct stock investments

• Many fixed indexed annuities have no annual fees and can help protect against inflation through market-linked growth potential

• These annuities are designed for investors seeking safety with growth opportunities, typically offering 4-8% annual returns based on market performance

• Tax-deferred growth means you don’t pay taxes on earnings until withdrawal, potentially saving thousands in taxes during accumulation

Most Americans approaching retirement face an impossible choice: accept minimal returns from “safe” investments or risk their life savings in volatile stock markets. Traditional savings vehicles like CDs and money market accounts barely keep pace with inflation, while direct investment in stocks exposes your retirement accounts to devastating market downturns.

Fixed indexed annuities offer a compelling middle ground—allowing you to participate in market gains while protecting your principal from losses. These insurance contracts have become increasingly popular among conservative investors seeking growth potential without the sleepless nights that come with market volatility.

In this comprehensive guide, you’ll discover how fixed indexed annuities work, their unique benefits for retirement income planning, and whether they might be the right fit for your financial goals.

Introduction to Annuities

Annuities are long-term financial products designed to help individuals secure a steady income stream in retirement. At their core, an annuity is a contract between you and an insurance company, where you contribute funds—either as a lump sum or through a series of payments—in exchange for future income payments. One of the primary attractions of annuities is the ability to receive guaranteed income, which can help cover essential expenses throughout retirement.

Among the various types, fixed indexed annuities stand out for their unique blend of principal protection and growth potential. As a type of deferred annuity, a fixed indexed annuity allows your money to grow tax deferred, meaning you won’t pay ordinary income tax on earnings until you begin withdrawals. This tax deferred growth can significantly enhance your retirement savings over time.

The guarantees provided by annuities—including principal protection and lifetime income—are backed by the claims paying ability of the issuing insurance company. This means your peace of mind depends on the financial strength of the insurance company you choose. With a fixed indexed annuity, your income stream and account value are not directly exposed to market losses, but instead benefit from interest credited based on the performance of a chosen market index. When you eventually begin taking withdrawals, the amounts you receive are subject to ordinary income tax, rather than capital gains rates.

In summary, annuities—especially fixed indexed annuities—offer a powerful combination of guaranteed income, principal protection, and tax deferred growth, making them a valuable tool for retirement planning.

Types of Annuities

When considering annuities for your retirement strategy, it’s important to understand the different types available, as each offers distinct features and benefits. The main categories include fixed annuities, variable annuities, indexed annuities, and registered index linked annuities.

Fixed annuitiesprovide a guaranteed, fixed interest rate for a set period, ensuring predictable growth and income. The insurance company assumes all investment risk, making fixed annuities a popular choice for those seeking stability and principal protection.

Variable annuitiesoffer the potential for higher returns by allowing you to invest in a selection of mutual funds. While this can lead to greater growth potential, it also introduces market risk—your account value can fluctuate with the performance of the underlying investments. Variable annuities may be suitable for those comfortable with market ups and downs and seeking more aggressive growth.

Indexed annuities, such as fixed indexed annuities, combine elements of both fixed and variable annuities. They offer principal protection from market losses, while providing growth potential linked to a market index, such as the S&P 500. You don’t invest directly in the market index, but your credited interest is based on its performance, subject to certain limits.

Registered index linked annuities(RILAs) are a newer type of annuity that also ties growth to a market index, but with a different risk profile. RILAs, which are registered with the Securities and Exchange Commission (SEC), offer a buffer against a certain level of market losses, rather than full principal protection. This means you may absorb some losses in exchange for potentially higher growth, depending on the contract terms.

Each type of annuity offers a unique balance of principal protection, growth potential, and risk. Understanding these differences can help you and your financial professional determine which annuity best fits your retirement goals and risk tolerance.

What Are Fixed Indexed Annuities and How Do They Work

A fixed indexed annuity is an insurance contract between you and a life insurance company that promises to return your principal plus interest based on the performance of a specified market index, such as the S&P 500 or Nasdaq-100. Unlike variable annuities, where you directly own mutual funds and face market risk, or a traditional fixed annuity, which guarantees a fixed rate of return over a set period, fixed index annuities provide a unique hybrid approach that offers growth potential linked to an index.

Here’s how the basic mechanics work: You deposit a lump sum with an issuing insurance company, and your money grows tax deferred over time. The insurance company credits interest to your annuity contract based on positive movements in your chosen market index, but you never actually own stocks or index funds. Instead, the insurance company uses complex financial instruments to track index performance while guaranteeing your principal remains protected. Many fixed indexed annuities also offer a fixed account option, which provides a guaranteed interest rate and stable returns, giving you flexibility to allocate funds between the fixed account and index-linked strategies.

The key difference from direct investment lies in the asymmetric risk profile. When the underlying index gains value, you receive a portion of those gains up to certain limits. When the market index experiences negative returns, you receive zero interest for that period but never lose your principal or previously credited interest. Fixed indexed annuities allow you to earn interest based on index performance, which can help grow your contract value over time.

Let’s look at a simple example: Suppose the S&P 500 gains 10% in a given year, and your fixed index annuity has an 80% participation rate with a 6% cap rate. You would receive 6% credited interest (the cap applied because 80% of 10% equals 8%, but the cap limits you to 6%). Conversely, if the S&P 500 loses 15% the following year, you would receive 0% interest but lose nothing from your account value.

Contract terms typically last 5-10 years with automatic renewal options. At regular intervals, usually annually, the insurance company resets the terms and may adjust cap rates, participation rates, or spreads based on current market conditions and interest rate environments. Some contracts may also apply a market value adjustment to withdrawals that exceed penalty-free amounts during the early contract period, which can affect the amount you receive.

How Fixed Indexed Annuities Shield Against Market Volatility

The primary attraction of fixed indexed annuities lies in their ability to provide downside protection during turbulent market periods. This floor protection ensures that your principal and any previously credited gains remain intact, even during severe market crashes.

Consider the real-world impact during the 2008 financial crisis: While the S&P 500 plummeted 37% that year, investors with fixed indexed annuities experienced 0% returns instead of devastating losses. Their retirement savings remained completely intact, allowing them to participate in the subsequent market recovery without having to make up for previous losses.

The protection mechanism works through annual lock-in features. Each year, any positive interest credited to your annuity contract becomes part of your new protected principal amount. This means that even if you experience several years of strong market-linked gains followed by a market crash, all those previous gains are permanently locked in and cannot be erased by future market declines.

This volatility smoothing provides tremendous peace of mind for conservative investors. Instead of experiencing the emotional roller coaster of watching your retirement accounts swing wildly with market sentiment, you receive steady, measured growth based only on positive market years. The psychological benefit of sleeping well during market turmoil cannot be overstated for those approaching or already in retirement.

The mathematical advantage becomes clear over longer periods. While aggressive investors might achieve higher returns during prolonged bull markets, the protection from major losses often results in superior risk-adjusted returns for fixed indexed annuity holders, particularly when considering sequence of returns risk near retirement.

Protection Against Inflation Through Market-Linked Growth

Fixed indexed annuities offer meaningful protection against inflation through their connection to stock market indexes, which have historically outpaced inflation over long periods. While they don’t provide explicit inflation adjustments like Treasury Inflation-Protected Securities (TIPS), their market-linked growth mechanism serves as an effective inflation hedge.

The underlying logic is compelling: stock market indexes typically reflect the growth of companies that adapt to and benefit from inflationary environments. As businesses raise prices and expand operations to maintain profitability during inflationary periods, stock indexes tend to rise correspondingly, benefiting fixed index annuities through their crediting mechanisms.

Historical data supports this inflation protection. Over the past 90 years, the S&P 500 has averaged approximately 10% annual returns, significantly exceeding typical inflation rates of 2-3%. Even after accounting for the caps and participation limits of fixed indexed annuities, credited interest rates of 4-7% annually provide meaningful protection against purchasing power erosion.

Consider a practical scenario: If inflation runs at 4% annually while your fixed indexed annuity credits 6% interest, your real purchasing power increases by approximately 2% each year. Over a 20-year retirement period, this compounding effect can substantially preserve and even enhance your standard of living.

The tax deferred growth feature amplifies this inflation protection. Unlike taxable investments where you pay income tax on gains each year, your fixed indexed annuity allows the full amount of credited interest to compound without tax erosion. This tax deferral can add significant value over long accumulation periods, effectively providing additional inflation protection through enhanced compound growth.

Buffer Annuities: How They Compare to Fixed Indexed Annuities

Buffer annuities, sometimes called “buffered” or “structured” annuities, are designed to offer a middle ground between full principal protection and higher growth potential. Like fixed indexed annuities, buffer annuities provide a way to participate in market growth while limiting the impact of market downturns on your retirement savings.

The key distinction lies in the level of protection. Buffer annuities shield your account from a specified percentage of market losses—known as the “buffer”—while you may still be exposed to losses beyond that threshold. For example, if your buffer annuity has a 10% buffer and the market index declines by 8%, you would not lose any value. However, if the market falls by 15%, you would absorb the loss beyond the 10% buffer, or 5% in this case.

In contrast, fixed indexed annuities offer full principal protection against market losses. No matter how the market index performs, your account value cannot decrease due to negative index returns. This makes fixed indexed annuities especially appealing for those who prioritize principal protection and guaranteed income.

Both buffer annuities and fixed indexed annuities offer tax deferred growth and can provide a reliable income stream in retirement. However, buffer annuities may offer higher growth potential than fixed indexed annuities, since you are accepting some risk of loss in exchange for the possibility of greater credited interest. The choice between a buffer annuity and a fixed indexed annuity depends on your comfort with market risk, your need for principal protection, and your retirement income goals.

Ultimately, working with a knowledgeable financial professional can help you evaluate whether a buffer annuity, a fixed indexed annuity, or another type of indexed annuity best aligns with your long-term retirement strategy.

Guaranteed Lifetime Income Options

One of the most valuable features of fixed indexed annuities is their ability to provide guaranteed income that lasts for your entire lifetime, regardless of how long you live or how markets perform. This addresses one of retirement’s greatest fears: outliving your money.

Fixed indexed annuities offer guaranteed lifetime income through two primary mechanisms: annuitization of the contract value, or optional income riders that can be added to your base contract. These options can provide lifetime payments, ensuring a steady income stream for as long as you live. These income guarantees are backed by the claims paying ability and financial strength of the issuing insurance company.

How Income Guarantees Work

Income riders work by establishing a separate “benefit base” that grows independently of your contract value. This benefit base typically grows at a guaranteed rate (often 5-7% annually) regardless of market performance, providing a predictable foundation for future income calculations.

Here’s a real example: Suppose you invest $100,000 in a fixed indexed annuity at age 55 with a 6% guaranteed income rider. Over 10 years, your benefit base would grow to approximately $179,000, even if market conditions resulted in minimal credited interest to your actual account value. When you activate income at age 65, you might receive 5.5% of that benefit base annually—about $9,845 per year—guaranteed for life.

Many contracts include step-up features that increase your benefit base when market performance exceeds the guaranteed rate. If your account value grows to $200,000 due to strong index performance, your benefit base would step up to that higher amount, increasing your future guaranteed income accordingly.

Spousal benefits add another layer of protection for married couples. Most income riders continue payments to a surviving spouse at the same rate or a reduced rate (typically 75-100% of the original payment), ensuring financial confidence for both partners throughout their lifetimes.

The flexibility to choose when income begins provides valuable planning options. You can defer income to allow more growth, or start payments immediately if needed. Some contracts even allow you to pause and restart income payments based on changing circumstances.

This guaranteed income stream creates what financial professionals call an “income floor”—a base level of retirement paycheck that continues regardless of market conditions, portfolio performance, or longevity. When combined with Social Security and any pension benefits, this income floor can cover essential living expenses and provide remarkable peace of mind.

Low Cost Structure and Fee Transparency

Contrary to popular misconceptions, many fixed indexed annuities have remarkably low costs, particularly when compared to alternative retirement savings vehicles like mutual funds or variable annuities. Understanding the fee structure is crucial for making informed decisions about these products.

Basic fixed indexed annuity contracts often charge no annual management fees or administrative costs. Unlike mutual funds that typically charge 0.5-2% annually in expense ratios, or variable annuities with fees often exceeding 2-3% per year, a standard fixed index annuity allows your full account value to participate in index-linked growth without ongoing fee erosion.

The insurance company’s compensation comes primarily from the spread between their investment returns and the credits they provide to annuity holders. They invest your premium in a diversified portfolio of bonds and other conservative investments, then use a portion of the yield to purchase options that provide the index-linked returns. This business model allows them to profit while providing you with principal protection and growth potential.

Optional riders, such as guaranteed lifetime income benefits, may come at an additional cost, typically between 0.5% and 1.5% annually of the benefit base or account value. These additional costs are clearly disclosed and only apply if you choose to add these features. Many investors find that the value of guaranteed income significantly outweighs these modest costs, particularly when considering the elimination of longevity risk.

Commission payments to selling agents are handled differently than with traditional investment products. These commissions, typically 3-7% of your premium, are paid by the insurance company from their profit margins and are not deducted from your account value. This means your full premium goes to work for you immediately, unlike some investment products where upfront loads reduce your initial investment.

When comparing costs, consider the total economic picture. The value of principal protection, tax deferral, and guaranteed income options often more than compensates for any product limitations or costs. A comprehensive cost-benefit analysis should include the economic value of these guarantees, which would be expensive or impossible to replicate through other investment strategies.

Understanding Caps, Participation Rates, and Spreads

Fixed indexed annuities use three primary mechanisms to share market gains with annuity holders while funding the guarantees that protect your principal: rate caps, participation rates, and spreads or margins. Understanding these concepts is essential for evaluating different products and setting realistic expectations.

A rate cap represents the maximum interest you can earn in any given crediting period, typically one year. If the underlying market index gains 15% but your annuity has an 8% cap, you would receive 8% credited interest for that period. Rate caps typically range from 4% to 12%, depending on the product, index, and current interest rate environment.

Participation rates determine what percentage of the index gains you receive, up to any applicable cap. An 80% participation rate means you receive 80% of the index’s positive performance. If the S&P 500 gains 10% and your participation rate is 80%, you would earn 8% before any cap or spread is applied.

Spreads or margins are fees deducted from index gains before interest is credited to your account. A 2% spread means the insurance company deducts 2 percentage points from the index return before calculating your credited interest.

Here’s a concrete example showing how these work together: The S&P 500 gains 15% in a given year. Your fixed indexed annuity has a 90% participation rate, 1.5% spread, and 8% cap. The calculation would be: 15% × 90% = 13.5%, minus 1.5% spread = 12%, but limited by the 8% cap, so you receive 8% credited interest.

These limitations might seem restrictive, but they serve a crucial purpose: funding the guarantee that you’ll never lose money in down markets. This trade-off—accepting limited upside in exchange for complete downside protection—often results in superior risk-adjusted returns over full market cycles, particularly for conservative investors who cannot afford significant losses.

Insurance companies regularly adjust these terms based on market conditions, interest rates, and their costs for providing guarantees. During periods of low interest rates, caps and participation rates may be lower. When rates rise, more generous terms often become available.

Addressing Common Objections and Misconceptions

Despite their growing popularity, fixed indexed annuities face persistent criticism, much of it based on outdated information or misunderstanding of how modern products work. Let’s address the most common objections with factual analysis.

Myth: “Annuities are expensive”

Truth:Basic fixed indexed annuity contracts often have zero annual fees, making them less expensive than most mutual funds, ETFs with advisory fees, or variable annuities. A typical diversified mutual fund portfolio charges 0.8-1.5% annually, while a basic fixed index annuity charges nothing for the core benefits. Optional riders add costs, but only if you choose them.

Myth: “Only insurance companies benefit”

Truth:Fixed indexed annuities provide benefits impossible to replicate elsewhere: guaranteed principal protection combined with market upside participation and lifetime income options. Insurance companies do profit, but they earn this profit by assuming risks (market, longevity, and credit risk) that individual investors cannot manage effectively on their own.

Complexity concernsare legitimate but often overblown. Modern annuity contracts provide clear annual statements showing exactly how interest was credited, what caps and participation rates applied, and how your account value changed. Many products now offer simplified crediting methods and online tools to track performance.

Liquidity worriesdeserve consideration but shouldn’t be deal-breakers for appropriate investors. Most contracts allow 10% annual penalty-free withdrawals after the first year, plus full access for qualified hardships like nursing home care, terminal illness, or unemployment. The surrender charge schedule provides a roadmap for when full liquidity returns, typically after 7-10 years. Withdrawals from fixed indexed annuities are considered taxable amounts and are subject to ordinary income tax.

Real Cost-Benefit Analysis

Compare fixed indexed annuities to realistic alternatives available to conservative investors:

• Stock market volatility:Direct equity investment provides unlimited upside but exposes you to potentially devastating losses, particularly problematic near retirement

• Bond interest rate risk:Rising rates erode bond values; fixed indexed annuities maintain principal protection regardless of rate movements

• CD low returns:Current CD rates of 3-5% may not keep pace with inflation over long periods

• Money market inflation erosion:Ultra-safe investments often lose purchasing power over time

The value of guarantees has measurable economic worth. Academic studies suggest that the downside protection provided by fixed indexed annuities has an economic value equivalent to 1-2% of annual returns. Combined with tax deferral benefits and potential for lifetime income, the total value proposition often exceeds the costs of product limitations.

Tax benefits provide additional value often overlooked in cost comparisons. Tax deferred growth means you keep more of your returns working for you during accumulation years. For investors in higher tax brackets, this deferral can save thousands of dollars compared to taxable investment alternatives. Additionally, net investment income from fixed indexed annuities is subject to specific tax rules and may impact your overall tax liability, especially for nonqualified contracts.

Who Should Consider Fixed Indexed Annuities

Fixed indexed annuities aren’t suitable for every investor, but they can be excellent choices for specific situations and investor profiles. Understanding whether you’re a good candidate requires honest assessment of your risk tolerance, time horizon, and financial goals.

Risk-averse investorsrepresent the primary target audience for fixed indexed annuities. If the thought of losing 20-30% of your retirement savings during a market downturn keeps you awake at night, the principal protection offered by these products provides invaluable peace of mind. This is particularly relevant for investors who have been “burned” by previous market crashes and seek growth potential without the emotional stress of market volatility.

Age considerationsplay a crucial role in suitability. Fixed indexed annuities typically work best for people age 50 and older with investment timelines of 10+ years. Younger investors with longer time horizons might benefit more from aggressive growth strategies, accepting short-term volatility for potentially higher long-term returns. However, even younger investors sometimes use fixed indexed annuities as part of a diversified strategy.

Portfolio diversificationrepresents another key use case. Fixed indexed annuities complement traditional retirement accounts like 401(k)s and IRAs by providing a guaranteed income layer that isn’t subject to market risk. This creates what financial professionals call a “three-bucket” retirement strategy: growth investments for long-term wealth building, conservative investments for stability, and guaranteed income products for essential expenses.

Specific situations where fixed indexed annuities excel include:

Pre-retirees worried about sequence of returns risk- the danger of poor market performance early in retirement when large withdrawals amplify losses. Fixed indexed annuities eliminate this risk for the portion of assets allocated to them.

Those seeking predictable incomewho want to ensure basic living expenses are covered regardless of market conditions, Social Security changes, or longevity.

Investors planning for spousal protectionwho need to ensure surviving spouses receive continued income even if they’re not financially sophisticated.

High-net-worth individualsseeking tax deferral benefits and creditor protection (in many states) for a portion of their assets.

Conservative investors dissatisfied with bond and CD returnswho want inflation protection without stock market risk.

Fixed indexed annuities work particularly well for creating an “income floor” - covering essential expenses through guaranteed sources (Social Security, pensions, annuity income) while using other investments for discretionary spending and legacy goals.

How to Evaluate and Purchase Fixed Indexed Annuities

Selecting the right fixed indexed annuity requires careful evaluation of multiple factors, from insurance company strength to product features. This process demands thorough due diligence and often benefits from professional guidance. At Revolutionary Wealth, we help guide individuals and families through the process to understand which options align best with their goals. 

Insurance company strengthshould be your first consideration. Your fixed indexed annuity is only as secure as the claims paying ability of the issuing insurance company and its respective affiliates. Guarantees are backed solely by the financial strength and claims-paying ability of the insurance company and its respective affiliates; unrelated third parties do not provide these guarantees or make claims about the product’s financial strength.

Research the insurance company’s history, market presence, and specialization in annuity products. Companies with decades of experience and substantial annuity business often provide more competitive products and better service than those treating annuities as a sideline business.

Product comparisonacross multiple carriers is essential because features and pricing vary significantly. Key factors to evaluate include:

• Cap rates and participation rates for your preferred indexes

• Available index options (S&P 500, Nasdaq-100, Dow Jones indices LLC, etc.). Note that such parties as index providers and licensors do not guarantee the performance of the annuity or make representations about its suitability.

• Crediting methods (annual point-to-point, monthly sum, etc.)

• Optional rider costs and benefits

• Surrender charge schedules and penalty-free withdrawal provisions

• Death benefit features and beneficiary options. Fixed indexed annuities can provide death benefit payouts to beneficiaries, offering financial confidence and legacy planning.

When comparing products, you may encounter a registered index linked annuity. A registered index linked annuity is a type of annuity that offers market participation with downside protection and income guarantees, differing from traditional fixed indexed annuities by allowing for both limited gains and limited losses based on market performance.

Professional guidancefrom a licensed financial professional can help navigate the complexity of product comparisons and suitability analysis. Look for professionals who represent multiple insurance companies and can provide objective comparisons rather than pushing a single company’s products. They should be able to explain product illustrations, show you how different scenarios would affect your returns, and help you understand all contract terms before you commit.

Documentation reviewis crucial before signing any annuity contract. Key documents include the product brochure, contract specimen, and any applicable riders. Pay particular attention to:

• Surrender schedule and early withdrawal penalties

• Guaranteed minimum interest rates

• How cap rates and participation rates can change over time

• Death benefit provisions and beneficiary designation options

• Required minimum distributions and tax implications

The information provided here does not constitute legal or tax advice. You should consult qualified professionals for personalized guidance regarding your specific situation. It is important to seek individualized tax advice to fully understand the tax implications of annuity contracts.

Suitability assessmentshould evaluate whether the product matches your risk tolerance, time horizon, liquidity needs, and overall financial situation. Consider how the annuity fits with your other retirement accounts, Social Security benefits, and income needs. The product should make sense as part of your overall retirement income strategy, not as an isolated investment.

Don’t rush the decision. Reputable insurance companies and professionals will give you time to review all materials and ask questions. Be wary of high-pressure sales tactics or promises that seem too good to be true.

Frequently Asked Questions

Can I lose money in a fixed indexed annuity?Your principal and previously credited gains are protected by the insurance company guarantee, so you cannot lose money due to market performance. However, early withdrawals during the surrender charge period may result in penalties that could reduce your account value below your initial premium. Additionally, inflation could erode your purchasing power over time if credited interest doesn’t keep pace with rising costs.

What happens if the insurance company fails?State guarantee associations protect annuity owners up to $250,000-$500,000 depending on your state of residence. These associations are funded by insurance companies and step in if an insurer becomes insolvent. However, highly rated insurance companies have extremely low failure rates - major insurers haven’t failed in decades, making this risk minimal for well-chosen products.

How do returns compare to investing directly in the stock market?You’ll typically receive 60-80% of market gains during positive years in exchange for 100% protection from losses during negative years. Over full market cycles including both bull and bear markets, this often results in better risk-adjusted returns than direct stock investment, particularly for conservative investors who might panic and sell during market downturns.

Can I access my money before retirement?Yes, most contracts allow 10% annual penalty-free withdrawals after the first contract year. Additionally, many contracts provide full access without surrender charges for qualified hardships such as nursing home care, terminal illness, disability, or unemployment. Some contracts also offer loans against the cash surrender value for temporary liquidity needs.

Are there tax advantages to fixed indexed annuities?Earnings grow tax deferred until withdrawal, potentially saving thousands in taxes during accumulation compared to taxable investments where you pay income tax annually on gains. However, withdrawals are subject to ordinary income tax rather than potentially lower capital gains rates, and early withdrawals before age 59½ may incur a 10% federal penalty unless you qualify for exceptions.

Disclosures:

This blog contains general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. There is no guarantee that the views and opinions expressed in this blog will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Revolutionary Wealth LLC does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. Past performance is no guarantee of future results.

Fixed Annuities are long term insurance contracts and there is a surrender charge imposed generally during the first 5 to 7 years that you own the annuity contract. Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. Withdrawals are taxed as ordinary income and, if taken prior to 59 ½, a 10% federal tax penalty.

Please consider the investment objectives, risks, charges, and expenses carefully before investing in Variable Annuities. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options, can be obtained from the insurance company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. The investment return and principal value of the variable annuity investment options are not guaranteed. Variable annuity sub-accounts fluctuate with changes in market conditions. The principal may be worth more or less than the original amount invested when the annuity is surrendered. Riders and rider benefits have specific limitations and costs and may not be available in all jurisdictions. Review any life insurance policy you are considering for complete details, including the terms and conditions of riders and exact coverage provided.

Mutual Funds and Exchange Traded Funds (ETF’s) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. An investment in the Fund involves risk, including possible loss of principal.

Neither Asset Allocation nor Diversification guarantee a profit or protect against a loss in a declining market. They are methods used to help manage investment risk. Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred. Returns do not include reinvested dividends.

The S&P 500 Index is a market capitalization–weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent US equity performance. The Nasdaq 100 is an index composed of the 100 largest, most actively traded U.S companies listed on the Nasdaq stock exchange. This index includes companies from a broad range of industries with the exception of those that operate in the financial industry, such as banks and investment companies. The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 actively traded “blue chip” stocks, primarily industrials, but includes financials and other service-oriented companies. The components, which change from time to time, represent between 15% and 20% of the market value of NYSE stocks.