Fixed Indexed Annuity - Minnesota

A fixed indexed annuity  is a type of tax-deferred annuity whose credited interest is linked to an equity index — usually the S&P 500 or an international index. It guarantees a minimum interest rate  if held to the end of the surrender term and protects against a loss of principal(the original amount you put in). 

The returns may be higher than fixed instruments such as CDs, money market accounts, and bonds but not as high as market returns. Index Annuities are insured by the State Guarantee Fund which is similar to the insurance provided by the FDIC. The guarantees in the contract are backed by the relative strength of the insurer.  It is important to add that each state guarantee fund has differing guidelines.

The contracts may be suitable for a portion of the asset portfolio for those who want to avoid risk and are in retirement or nearing retirement age. The idea of purchasing an index annuity is to realize higher gains than CD rates of return, money markets or bonds, while still protecting your money from loss. 

Indexed annuities may also be referred to as fixed indexed annuities. The mechanics of indexed annuities are often complex and the returns can vary greatly depending on the month and year the annuity is purchased. Like many other types of annuities, indexed annuities usually carry a surrender charge for early withdrawal. These "surrender periods" range between 3 and 16 years, typically about ten.  

If properly planned a FIA can be a great place to put the safe portion of your retirement portfolio.