Fixed Indexed Annuities Explained
Grow Your Savings While Protecting Your Principal
Fixed indexed annuities link your growth to a market index while guaranteeing your principal never loses value in a down market.
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Index-Linked Growth
Your account earns interest based on the performance of a market index like the S&P 500, but you are never directly invested in the market. Growth potential without direct market risk.
Floor Protection
A built-in floor, typically 0%, means your principal cannot lose value in a down market year. Your savings stay intact regardless of what the index does.
Tax-Deferred Accumulation
Interest credited to your account grows without being taxed each year. You pay taxes only when you take withdrawals, allowing more of your money to compound over time.
How It Works
From Deposit to Credited Growth
You make a deposit
You transfer a lump sum or rollover funds into the annuity contract. There is no ongoing contribution requirement.
The carrier invests in bonds
The insurance company invests the bulk of your deposit in bonds to guarantee your principal. A small portion funds the index-linked options.
Interest is credited based on an index
At the end of each crediting period, the carrier calculates the gain based on your chosen index strategy: cap, participation rate, or spread.
You keep the credited growth
Any credited interest is locked in. In a down year, your interest credit is zero, but your principal never declines due to market performance.
How Do They Compare?
| Feature | Fixed Indexed Annuity (FIA) | MYGA |
|---|---|---|
| Growth type | Index-linked (with cap or spread) | Fixed interest rate |
| Principal protection | Yes, floor at 0% | Yes, fully protected |
| Rate type | Variable (tied to index performance) | Fixed for full term |
| Best for | Growth potential + downside protection | Predictable, CD-like returns |
| Typical term | 5-10 years | 2-10 years |
| Liquidity | Surrender charges during term | Surrender charges during term |
Growth type
FIA
Index-linked (with cap or spread)
MYGA
Fixed interest rate
Principal protection
FIA
Yes, floor at 0%
MYGA
Yes, fully protected
Rate type
FIA
Variable (tied to index performance)
MYGA
Fixed for full term
Best for
FIA
Growth potential + downside protection
MYGA
Predictable, CD-like returns
Typical term
FIA
5-10 years
MYGA
2-10 years
Liquidity
FIA
Surrender charges during term
MYGA
Surrender charges during term
AM Best A-Rated Carriers
Carrier availability varies by state. Not all carriers available in all regions.
FIA Articles and Guides
How Does a Fixed Indexed Annuity Work
A fixed indexed annuity lets your money grow based on a market index while protecting your principal from loss. Here is a plain-language breakdown of how the product works and what to expect.
Read article →FIA Cap Rates Explained: What They Are and How to Compare Them
Cap rates determine the maximum interest a fixed indexed annuity can credit in a given year. Understanding how they work — and how to compare them across carriers — can make a meaningful difference in long-term accumulation.
Read article →Fixed Indexed Annuity vs CD: Which Is Better for Retirement
Both fixed indexed annuities and CDs offer principal protection and predictable growth, but they differ significantly in tax treatment, growth potential, and liquidity. Here is a side-by-side breakdown.
Read article →