What Is FIA (Fixed Indexed Annuity)? Definition

Why it matters

Interest in an FIA is calculated using a formula with caps, participation rates, or spreads, so gains are limited. In return, the contract usually protects principal from market losses, subject to the insurer's ability to pay. FIAs often have long surrender periods and charges for early withdrawals. Dividends are not included in index returns. The SEC and NAIC both advise buyers to understand the crediting method. Terms vary by carrier and by state.

Source: investor.gov

Where we use this term

Annuities explained: fixed, fixed-index, MYGA, income riders and surrender charges

Related terms

Annuity: An annuity is a contract with an insurance company in which you pay a lump sum or a series of payments. In return, the insurer agrees to make payments to you, either right away or at a future date.
Fixed Annuity: A fixed annuity is an insurance contract that earns a stated interest rate set by the insurer. The rate is guaranteed for a period, and the insurer promises a minimum interest rate for the life of the contract.
Surrender Charge: A surrender charge is a fee an insurer charges if you withdraw more than the allowed amount from an annuity, or cancel the contract, during the surrender period. It is usually a percentage that declines each year.
Income Rider: An income rider is an optional annuity feature that guarantees a stream of lifetime income, often based on an income base that grows at a stated rate. It usually costs an annual fee.
Deferred Annuity: A deferred annuity is an annuity contract that delays payments until a future date chosen by the owner. Until then, the money can grow during an accumulation phase, tax deferred.

All 241 terms

Fixed Indexed Annuity (FIA)

Why it matters

Where we use this term

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