Fixed Index AnnuityThis type of Annuity has the potential to earn interest based on changes in an external Market Index. You choose the Index that’s right for your financial goals. For example ; the S&P 500 Index, Dow, Nasdaq and several other choices to allocate funds to.
This is different from traditional fixed annuities, which credit interest calculated at a fixed rate set in the contract. Because the chosen market index varies daily and is not predictable, the interest you earn through a fixed index annuity could be more or less than the interest from a traditional fixed annuity.
Many fixed index annuities also let you allocate premiums to a traditional fixed interest option, where interest is credited at a fixed rate.
Regardless of whether you choose fixed interest, indexed interest, or a combination of both, an annuity’s benefits can make it a valuable part of your overall retirement strategy.
However you choose to receive interest, the money in your annuity, including any bonuses, is never at risk due to market index volatility. That’s because, although external market indexes may affect your contract values, the contract does not directly participate in any stock, bond, or investments. You are not buying any bonds, shares of stocks, or shares of an index.
The external market index value does not include the dividends paid on the stocks underlying a stock index. These stock dividends are also not reflected in the interest credited to your contract.
You also have a choice of crediting methods. Crediting methods determine how much interest your annuity earns, based on the changes in an external market index. Each Insurance Carrier has different crediting methods.
Read the Disclosure Statements from each Insurance Carrier for full details of their crediting methods.