FIA’s are fixed indexed annuities. These are essentially fixed annuities with a variable rate of interest that is added to your contract value if any underlying market index (e.g. S&P 500) is positive.

Growth is subject to market fluctuation and, when quoted, is often accompanied by a rate ceiling and rate floor. The floor is the lowest rate of return you will receive on your initial investment, regardless of market conditions. The ceiling (aka cap), is the largest rate of return you can expect to receive if the benchmark index experiences a sharp increase. Cap rates are often re-set by the insurance company each year.


Fixed index annuities may credit higher interest rates than fixed interest rate deferred annuities

These can be purchased with funds rolled over from tax qualified plans (IRA’s, 401k's)

In a down market, the buyer will never lose principal


Upside potential is limited by a so-called participation rate, caps or a spread; return in rising market is trimmed

Buyers of these annuities never keep pace with a robust market

Caps, participation rate and spreads can be high; surrender charges can be imposed under circumstances