Index Annuity: Fixed Annuity or Variable Annuity?

Shawn Plummer

CEO, The Annuity Expert

Regarding annuities, there are two main types: fixed and variable. Within those categories, there are many different sub-types of annuities. One such type is the index annuity. So, what is an index annuity? Is it a fixed annuity or a variable annuity? This guide will explore the differences between these two types of annuities and help you decide which one is right for you!

Indexed Annuities Are Fixed Annuities

The first thing to understand is that, unlike a traditional fixed annuity, an index annuity provides the potential for your investment to grow. This growth is based on the performance of a specific market index, such as the S&P 500.

On the other hand, an index annuity shares some of that risk with the annuity owner. So while there is growth potential, there is also the potential for no growth if the market index underperforms.

Your investment will grow at a set rate with a traditional fixed annuity. With an index annuity, there are no guarantees. However, fixed index annuities typically offer a fixed interest rate in addition to index-based growth.

Use our fixed annuity calculator to determine how much income you could receive for the rest of your life.

Index Annuities Are Not Variable Annuities

Variable annuities are a type of investment-based annuity that fluctuates based on the stock market. This means that there is growth potential. However, there is also the potential for your investment to lose value if the stock market declines.

Index annuities are insurance-based annuities that do not fluctuate based on the stock market. This means growth potential, but your investment is protected from losses if the stock market declines.

Next Steps

Index annuities are becoming increasingly popular because they offer the potential for growth without the risk of stock market fluctuations. If you’re interested in learning more about index annuities, don’t hesitate to contact us for a quote. In addition, we would be happy to answer any questions and help you decide if this type of annuity is right for you.

Is An Indexed Annuity A Fixed Annuity Or Variable Annuity

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

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

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