Indexed Annuity
An annuity contract that credits interest based on the performance of an external market index, offering potential for higher returns than fixed annuities while protecting against market losses.
Understanding Indexed Annuity
Indexed annuities (also called equity-indexed annuities or fixed index annuities) share the index-linking mechanism with IUL policies. Key differences from IUL: no life insurance component, taxable distributions, potential income riders, and no health qualification required. For retirees who don't need life insurance, FIAs can be a simpler alternative; for those seeking both accumulation and insurance, IUL is often preferred.
Why This Matters for Retirement: Understanding Indexed Annuity is essential for making informed decisions about tax-free retirement income strategies. Whether you are evaluating an IUL policy, planning Roth conversions, or comparing retirement vehicles, this concept directly affects your outcomes.