Fixed Indexed Annuities, Explained

What is a fixed indexed annuity?

A fixed indexed annuity is an insurance contract, not an investment in the stock market itself. When you put money into an FIA, the insurance company credits interest to your contract based in part on the performance of a market index — but your principal is not directly invested in that index. This structure is what allows an FIA to offer growth potential tied to market movement while still protecting your original deposit from market losses.

How does it work?

Each year (or contract period), the insurance company calculates interest credits based on the performance of the index the contract is tied to, subject to the terms, caps, participation rates, or spreads outlined in your contract. If the index goes up, you may receive a positive interest credit. If the index goes down, your account generally does not lose value due to market performance — you simply receive no interest credit for that period. Your existing account value stays protected.

Key benefits

Who might consider an FIA?

Fixed indexed annuities are generally designed for people who want to protect a portion of their retirement savings from market risk while still participating in some growth potential — often as part of a broader "safe money" strategy alongside other retirement assets. Whether an FIA fits your situation depends on your goals, timeline, and full financial picture.