Fixed indexed annuities (FIAs) are a type of annuity that offers a unique combination of market-linked returns and protection of principle. In simple terms, FIAs are insurance products that provide a guaranteed minimum return on investment, with the potential for higher returns based on the performance of a market index, such as the S&P 500.
FIAs work by linking the interest rate credited to the annuity to the performance of the underlying market index. If the index performs well, the interest credited to the annuity will increase, up to a pre-determined cap or participation rate. If the index performs poorly, the interest credited to the annuity will not decrease, as the principal is protected. Additionally, the interest credited to the annuity may be subject to caps or participation rates, which can limit potential returns.
One of the key benefits of FIAs is their potential for higher returns than traditional fixed annuities, while still offering protection of principal. This can be appealing for retirees or those nearing retirement who are looking for a way to grow their savings while minimizing or eliminating risk with no loss of principle.
When considering a FIA, it's important to thoroughly research the product and understand the terms and conditions, including any fees, surrender charges, or limitations on potential returns. Working with a licensed financial professional can also be helpful in determining whether a FIA is a good fit for your individual retirement goals and risk tolerance.
Overall, fixed indexed annuities can be a useful retirement savings tool for those seeking the potential for higher returns with protection of principal.
Looking forward to the opportunity to serve you and your family.
Ivonne Cabrera
Independent Life Insurance Broker
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