The word “annuity”
doesn’t tell the whole story.
Different annuity types have different market exposure, crediting rules, costs, and regulatory treatment.
Know which structure you are reviewing.
| Type | General structure | Key distinction |
|---|---|---|
| Traditional fixed annuity | Interest credited under a declared-rate arrangement. | Review guarantee periods and renewal rates. |
| Fixed index annuity | Interest credits based in part on an external index under contract rules. | Upside limits and crediting protections differ from directly owning the index. |
| Variable annuity | Values generally depend on selected investment options. | Market losses are possible; expenses and prospectus disclosures matter. |
| Registered index-linked annuity | Index-linked returns with specified buffers or floors. | Losses are possible; protections are limited and differ from fixed indexed structures. |
Ask for the right documents.
Review the actual contract and disclosure materials. For products registered as securities, review the prospectus and discuss the product with an appropriately registered professional. Do not transfer the protections of one annuity type to another.
Annuities are long-term insurance contracts and are not suitable for everyone. Surrender periods, surrender charges, withdrawal restrictions, fees, and tax consequences may apply. Guarantees are subject to contract terms and the claims-paying ability of the issuing insurance company. Product features and availability vary by carrier and state.
Further reading: FINRA: Indexed Annuity Risks and Rewards.
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