Glossary

Indexed annuity

A fixed annuity whose interest is tied to a market index's gains, limited by caps or participation rates, with a floor that shields it from index losses.

Also called: fixed indexed annuity, FIA, equity-indexed annuity

An indexed annuity, also called a fixed indexed annuity (FIA), is a deferred annuity that credits interest based partly on the performance of a market index such as the S&P 500. Your principal and past credits are protected from index declines by a floor, usually 0%, but your upside is limited by a cap, participation rate or spread. Because it's a fixed insurance product, it is regulated by state insurance departments rather than as a security, unlike a RILA or variable annuity.

Say, hypothetically, you put $100,000 into an FIA with an annual point-to-point index crediting method and an 8% cap. In a year the index gains 14%, you're credited 8%, bringing the value to $108,000. In a year it loses 20%, you're credited 0% and keep the $108,000. The design trades part of the market's upside for protection against losses.

Indexed annuities often carry surrender periods of seven to 10 years, and insurers can reset caps and participation rates each year. Optional income riders add cost. Before buying, ask about the surrender schedule, how caps on existing contracts have changed over time, and how the agent is paid. See fixed indexed annuities: caps, participation rates and trade-offs and are annuities a good idea?.

Last reviewed October 4, 2026

In the index now

Related terms

Fixed annuity An annuity that credits a rate set by the insurer, with principal protected from market losses, either deferring growth or paying fixed income. Index crediting method The formula an indexed annuity or IUL policy uses to turn an index's movement into interest, such as annual point-to-point or monthly average. Cap rate The maximum rate an indexed universal life policy or indexed annuity will credit for a period, no matter how much the linked index rises. Participation rate The percentage of an index's gain that an indexed annuity or IUL policy credits as interest, such as 80% of a 10% rise, or 8%. Surrender charge A fee deducted from a policy's or annuity's value if you cancel or withdraw too much in its early years, usually shrinking each year. RILA A deferred annuity, registered as a security, whose returns track a market index with partial downside protection and capped upside.

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Related insurers

Allianz Life The Minneapolis-based U.S. arm of Germany's Allianz SE, a leading fixed index annuity seller that offers indexed universal life through financial professionals. American National Texas insurer founded in 1905, owned by Brookfield since 2022; it stopped selling most new life policies in 2025 and now focuses on annuities. Athene Apollo-owned retirement company in West Des Moines, Iowa; a top U.S. annuity seller that no longer sells life insurance but still services older life blocks. F&G Annuities & Life A Des Moines annuity and indexed universal life insurer, publicly traded as FG and about 70% owned by Fidelity National Financial, sold through agents. Global Atlantic KKR-owned annuity, preneed funeral insurance and reinsurance group; it stopped selling indexed universal life in 2023 but services large acquired life blocks. Kuvare An annuity and reinsurance group that owns Lincoln Benefit Life, a former Allstate company closed to new sales, plus Guaranty Income Life and United Life.

Related annuity companies

Allianz Life Minneapolis-based U.S. arm of Germany's Allianz SE, a long-time leader in fixed index annuities that also sells registered index-linked annuities. American Equity and American National Brookfield Wealth Solutions' annuity group: American Equity and Eagle Life fixed index annuities and American National MYGAs, sold through agents and online. Athene Apollo-owned annuity specialist in West Des Moines, Iowa, and the largest U.S. individual annuity writer by 2024 premiums, sold through financial professionals. Corebridge Financial AIG's former life and retirement arm, a top-two U.S. annuity writer issuing through American General Life, and set to merge with Equitable by end of 2026. Delaware Life Indiana-based Group 1001 insurer selling fixed indexed annuities and MYGAs through agents; ratings went to negative outlook in 2026 over affiliated investments. EquiTrust Life Chicago-based fixed and fixed indexed annuity specialist sold through independent agents; owned since 2025 by Amistad Financial Group. AM Best rates it B++.