Fixed vs. Indexed Annuities
Fixed and fixed indexed annuities are insurance contracts that can help people plan for retirement. Traditional fixed annuities credit interest according to the contract, while fixed indexed annuities calculate interest using a formula linked to a market index.
By Leif Allison · Educational draft · Pending content review
Understanding fixed annuities
A traditional fixed annuity credits interest according to the insurer's contract terms.
Some contracts offer a guaranteed interest rate for a specified period. Renewal rates and minimum guarantees depend on the contract.
How fixed indexed annuities work
A fixed indexed annuity uses an external market index to help determine interest credits.
You do not directly invest in the index. Participation rates, caps, spreads, and other provisions can limit credited interest.
Choosing between the two
Consider your retirement timeline, liquidity needs, financial goals, and comfort with different crediting methods.
Review surrender charges, guarantees, optional riders, and the insurer's financial strength before deciding.
Sources and further reading
Carrier sources explain product mechanics; linking to them does not imply an agency appointment or product availability.
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