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Fixed Indexed Annuities

 

FIA's are a type of annuity with characteristics similar to both fixed and variable annuities. Similar to a fixed annuity, they may earn interest. And in comparison to variable annuities they often have riders available for withdrawal benefits like death or guaranteed living withdrawal benefits. They are called "Indexed" because the returns are linked, but not dependent upon, market performance. To make it simple - in an up market, an FIA credits the contract. In a down market and with most FIAs, principal is not lost. This is a great option to give your clients a return of their money.

 

What is the advantage of an FIA? In the case of a down market, where the index experiences negative returns, no market loss is incurred and the investor rarely loses principal due to market declines. What's the tradeoff and how can this work? An FIA is built with spreads, caps or participation rates applied to the product, so while the investor is typically not being credited with the actual performance of the index, they may still receive credit to the contract. Again, the positive is that they don't lose money due to market declines.

 

Depending on the owner's allocations, FIA's typically credit interest through two primary methods:

 

  • A fixed account
  • Options based on the changes in the return of a specified index, like the S&P 500®.
 

S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("S&P")  and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"). These trademarks have been licensed for use by S&P Dow Jones Indices LLC. S&P® and S&P 500® are trademarks of S&P and have been sublicensed for certain purposes by Security Benefit Life Insurance Company. The S&P 500® index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Security Benefit Life Insurance Company. The Security Benefit Foundations Annuity is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P or their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, S&P or their respective affiliates make any representation regarding the advisability of purchasing such product.

 

The Security Benefit Foundations Annuity, form 5800 (11-10) and ICC10 5800 (11-10), a flexible purchase payment deferred fixed indexed annuity, and the Guaranteed Lifetime Withdrawal Benefit Rider, form 5821 (5-11) and ICC11 5821 (5-11), are issued by Security Benefit Life Insurance Company.

 

Guarantees provided by annuities are subject to the financial strength of the issuing insurance company.  Annuities are not FDIC insured; are not obligations or deposits of, and are not guaranteed or underwritten by any bank, savings and loan or credit union or its affiliates; are unrelated to and not a condition of the provision or term of any banking service or activity.

 
For Financial Professional Use Only, Not for Use with Consumers

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