Who's Who In An FIA

What Is a Fixed Indexed Annuity?

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Who’s Who in a Fixed Indexed Annuity?

So, what is a fixed indexed annuity? A fixed indexed annuity, or FIA, is a contract between you and an insurance company. This agreement explains the specifics of this annuity product. You can gain quite a lot by understanding them.

Also, it establishes the terms of your annuity contract, such as the rights and responsibilities of each party. Furthermore, it explains how long your money needs to stay in the annuity to increase, and when it can be paid out.


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What are the Roles in a Fixed Indexed Annuity?

It’s important to have an insurance professional on your side who understands annuities and can educate you on them. Essentially, there are three, sometimes four, main roles in an annuity contract. Here they are: 

This is the company that issues the annuity. The company is responsible for backing the annuity’s guarantees.

The contract owner is the person who makes decisions about the annuity. For example, they select who the beneficiaries are. The annuitant, meanwhile, is the person whose life expectancy is used in calculating the annuity payment. The contract owner and annuitant are usually the same person, but not always. This is why we say there are sometimes three and sometimes four roles. 

A beneficiary, finally, is a person who receives a death benefit when the annuitant dies. It’s important to name at least one beneficiary. Without at least one, the money in your annuity is subject to probate. A death benefit can be paid without probate.

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More Details in Regards to FIAs

Lastly, what is a fixed indexed annuity in terms of the more minute details? Well, the life insurance company will lay out the details in your contract. For example, which type of annuity you have and the terms and periods, such as the period in which your money can grow without withdrawing money. If you need access to your money before this period ends, very few options will work in your favor. A surrender period exists for every annuity, meaning early withdrawal during that period results in a fee or surrender charge.

There are many options available to retirees when it comes to annuities. This is why it’s important to speak to professionals if you’re confused about what a fixed indexed annuity is.

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