Fixed index annuities (FIAs) are long-term savings products designed for retirement. They combine principal protection with growth potential by linking returns to a stock market index, such as the S&P 500, without directly investing in the market. FIAs offer tax-deferred growth, ensuring you only pay taxes upon withdrawal, and often include optional features like guaranteed lifetime income or enhanced death benefits. Key benefits include protection from market losses, capped upside potential, and flexibility in payout options. However, they may have limitations such as surrender charges, participation rate caps, and fees
What are the main benefits of fixed index
The main benefits of fixed index annuities (FIAs) include:
- Principal Protection: Your initial investment is safeguarded from market downturns.
- Tax-Deferred Growth: Earnings grow without annual taxation until withdrawal, allowing for compounding.
- Growth Potential: Returns are linked to a market index, offering upside potential without direct market exposure.
- Guaranteed Lifetime Income: Optional riders or annuitization provide reliable income for life.
- Beneficiary Protection: Ensures designated beneficiaries receive funds, bypassing probate.
How do Fixed Index Annuities provide liquidity
Fixed index annuities (FIAs) provide liquidity through penalty-free withdrawals, typically allowing owners to access up to 10% of their contract value annually during the accumulation phase without incurring surrender charges. Some contracts may also offer enhanced liquidity options for specific circumstances, such as qualifying health conditions. However, withdrawals before age 59½ may be subject to a 10% federal tax penalty.