Who's Who in a Fixed Indexed Annuity?
What is a fixed indexed annuity?
Basically, a fixed indexed annuity (or FIA) is a contract with an insurance company. The contract outlines the details of the agreement. It confirms the terms of the annuity, including the rights and responsibilities each party has. The contract also highlights other details such as how long your money needs to remain in the annuity and when it can be taken out.
It could be possible to secure guaranteed* income for life using certain annuity products. For this reason, they’re usually a good tool to have as part of your financial retirement strategy, if reasonable rates of return** and protection of principal are benefits you care about. When it comes to annuities, there are a lot of different options to consider. Reach out to us at Sue Gordon Retirement Strategies for more information.
Who's Who in an FIA?
Four roles exist within an annuity contract such as an FIA. These are:
- The issuing insurance company, who issues the annuity and backs its guarantees
- The contract owner, who contributes the money into the annuity
- The annuitant, who receives the payout from the annuity once the distribution phase begins (most likely is also the contract owner, but they could be different people)
- Beneficiaries, who receive a death benefit after the annuitant passes away
What is a Fixed Indexed Annuity?
In your agreement, the insurance company will lay out all the details. For example, you’ll see things like which type of annuity you have, the length of the accumulation stage, how you will receive payments, what your fees are, etc.
Does an FIA Come With Death Benefit?
Certain annuities do offer a death benefit to your spouse or other beneficiaries. There are lots of options available to you when it comes to this part of the product. You may decide you want the entire death benefit to be paid to your spouse once you pass away. Or, you want it to be received in the form of regular payments.
Whatever options you choose, be sure that you understand the specifics of what a fixed indexed annuity is and how it works.
We’d be happy to answer any questions you have about this product and the benefits it offers.