Fixed Indexed Annuities

Fixed-Indexed Annuities

By the end of 2004, sales of fixed-indexed annuities (FIAs) are expected to reach about $17 billion, up from $14 billion in 2003.¹

Experts say the rise in FIA sales corresponds to the rise in the stock market. As stock prices improve, investors may want to participate in wealth-creation opportunities. FIAs may be just the type of risk-managed financial vehicle that many investors can use to round out their

retirement plans.²

Best of Both Worlds

FIAs are fixed annuity contracts that offer returns tied to a market index, such as the S&P 500. They offer the potential for index-type returns but feature a minimum return rate guarantee like traditional fixed annuities.³

Typically, FIAs include a no-loss provision, which means that once a premium payment has been made or interest has been credited to the account, the value of the account cannot decrease below that amount.

In the event that the index to which the annuity is tied underperforms or experiences a loss, the worst it can do is earn the contract's minimum guaranteed rate of return. Finally, FIAs also offer the potential for tax-deferred accumulation.

1) The Wall Street Journal, June 15, 2004

2) Most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. In addition, if you surrender the contract before age 59½, you may be subject to a 10 percent federal income tax penalty.

3) The guarantees of fixed annuity contracts are contingent on the claims-paying ability of the issuing insurance company.