Fixed index annuities can help you accumulate money for retirement and provide guaranteed income after you retire. A fixed index annuity may be a good choice if you want the opportunity to earn indexed interest, but don’t want to risk losing money in the market.

What is a fixed index annuity?

A fixed index annuity is a contract between you and an insurance company. In exchange for the money you place in your annuity, the insurance company guarantees several benefits – including a steady stream of retirement income. And because it’s designed to help you prepare for retirement, a fixed index annuity provides certain tax advantages as well.

Six reasons to consider a fixed index annuity (FIA)

1 Accumulate for retirement
FIAs offer the potential to earn interest based on changes in an external index. Annuities give you a choice of several indexes and even some exclusive index options.
2 Protect your principal
Your contract can earn interest based on an external index, but you’re not actually buying any stocks or shares of an index. This means the money in your FIA (your “principal”) is not at risk due to market losses.
3 Grow tax-deferred
You don’t pay taxes on the interest your annuity earns until you take money out. This helps compound your interest, so the money in your contract can accumulate faster.
4 Get flexibility
Some FIAs offer riders (either built in or at an additional cost) to help you address specific needs. They also offer a variety of crediting methods and flexible options for receiving income.
5 Receive guaranteed income
Annuities are designed to provide a reliable stream of retirement income, either for a set period or for as long as you live. Some FIAs even offer you the potential to get increasing income.
6 Leave a legacy
FIAs pay your loved ones a death benefit if you pass away before you start taking scheduled annuity payments. (And, if properly structured, the death benefit is not subject to probate.)

See how fixed index annuities work.

Fixed index annuities have two phases: The first is the accumulation phase, during which your annuity can earn interest and grow tax-deferred.

You buy a fixed index annuity.

An annuity is simply a contract between you and an insurance company. You pay the insurance company one or more purchase payments (“premium”). In exchange, you get the benefits the insurance company guarantees through your annuity contract.

Your annuity earns interest.

During the accumulation phase, your annuity can earn interest based on the growth of an external index (we call this “indexed interest”). But because you’re not actually participating in the market, the money in your annuity is not at risk. If you prefer, you can instead earn an annual fixed rate of interest that is guaranteed.

Your annuity grows tax-deferred.

You don’t have to pay taxes on the interest your contract earns until you take money out of your annuity. This tax deferral can help the money in your annuity accumulate faster.

The second phase begins when you start taking income. We call this the distribution phase.

Your annuity provides income.

After a period of time specified by your contract, you may then receive the amount allowed by your FIA contract in a lump sum, over a set period of time, or as income for the rest of your life. Some annuities even provide the opportunity for increasing income.
https://www.allianzlife.com/What-We-Offer/Annuities/Fixed-Index-Annuities
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