Can A Fixed Index Annuity Lose Money?

Shawn Plummer

CEO, The Annuity Expert

Not Directly Tied to the Stock Market

  • Key Feature: A fixed index annuity (FIA) is not directly invested in the stock market.
  • Function: It uses a stock market index (like the S&P 500) as a benchmark to calculate interest earnings.

Protection Against Market Downturns

  • Market Performance: FIAs do not directly lose value in a poor-performing stock market as they are not invested in the stocks.
  • Interest Earnings: The interest earned is based on the index’s performance, but the principal investment remains protected.
Fixed Index Annuity Lose Money

The Role of Fees

  • Product Feature Fees: Certain features, like an income rider, might have associated fees.
  • Impact on Value: These fees can reduce the overall value of the annuity, potentially leading to a loss in value, not due to market performance but due to cost deductions.

How Fees Can Affect Your Annuity’s Value

Understanding Fee Structures:

  • Income Rider Fees: A common feature that can have associated costs.
  • Effect on Annuity Value: Over time, these fees can accumulate and reduce the net value of the annuity.

Conclusion

A fixed index annuity protects against market downturns as it isn’t directly invested in the stock market. However, the fees associated with certain product features can lead to a reduction in their value. Understanding these aspects is crucial to managing expectations and financial planning effectively. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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