How to Reallocate Funds in a Fixed Indexed Annuity

Shawn Plummer

CEO, The Annuity Expert

In a world awash with financial jargon and complexity, it’s easy to feel overwhelmed, especially when making decisions about your money. However, understanding the steps to reallocate funds in a Fixed Indexed Annuity (FIA) doesn’t have to be complicated. This guide is tailored to give you precise, actionable steps infused with real-life examples. Our aim? To ensure you feel confident, informed, and ready to make the best decisions for your financial future.

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Understanding Fixed Indexed Annuities

Before diving into reallocation, it’s essential to grasp the basics of FIAs.

Example: Think of FIAs as a bridge. On one side, you have the volatile stock market; on the other, you have the safety of traditional savings. FIAs act as a bridge between these extremes, giving you a blend of security and potential returns.

Why People Choose FIAs

  • Safety: Your principal is protected against market downturns.
  • Potential for Growth: FIAs can earn interest based on a market index’s performance.
How To Reallocate Funds In A Fixed Indexed Annuity

Why Reallocate Funds in Your FIA?

The need to reallocate arises for several reasons: change in financial goals, market dynamics, or simply seeking better performance.

Example: Sarah, 45, initially allocated her FIA funds focusing on safety. As her children graduated, she felt the need to pursue more growth. So, she reconsidered and reallocated her funds accordingly.

Why Reallocate Funds In Your Fia

The Process of Reallocating Funds

It’s not just about making changes; it’s about making informed changes.

Reviewing Your Current Allocation

Start by understanding where your money currently sits.

Example: John found that 70% of his funds were linked to a specific market index, while 30% were in a fixed account. This understanding was the foundation of his reallocation decision.

Assessing Your Financial Goals

Your goals today might differ from what they were five years ago.

Example: Michael realized he wanted more security after his twins were born. He reallocated more funds into fixed accounts within his FIA.

Choosing New Allocation Strategies

Based on market research and personal goals, decide where to shift your money.

Example: After understanding its historical performance and future potential, Lisa shifted 40% of her funds to a different market index.

When Can You Reallocate Funds

When Can You Reallocate Funds?

Reallocating funds in a Fixed Indexed Annuity (FIA) is bound by specific timelines. Here’s a concise breakdown:

Contract Anniversary Dates

Most FIAs allow changes on the anniversary of your contract, making it a regular opportunity for adjustments.

During the Free-Look Period

Many FIAs offer a “free-look” period post-purchase, typically 10 to 30 days, permitting changes without penalties.

Specific Allocation Windows

Some FIA grant allocation changes during predefined periods outside the anniversary date, such as quarterly or semi-annually.

Upon Renewal or Rollover

End-of-term, renewal, or rollover periods are optimal moments to reconsider allocations.

Seeking Expert Advice

Never underestimate the power of expert advice. Financial advisors can provide insights based on market trends and your financial picture.

Example: When Emma was unsure about reallocating, her financial advisor provided insights on market trends and recommended a balanced approach.

Implementing Changes

After research and consultation, take actionable steps. Most insurance companies have straightforward processes for this.

Example: Alex contacted his insurance company, filled out a reallocation form, and shifted funds to his new strategy within a week.

The Process Of Reallocating Funds

Regularly Review and Adjust

Financial landscapes and personal priorities change. Regular reviews ensure your FIA aligns with your current goals.

Example: Every year, Nina reviews her FIA allocations. Last year, she made no changes. This year, she reallocated 10% to tap into a promising market trend.

Next Steps

Indexed Annuities provide a unique blend of safety and growth potential. Reallocating funds within them is dynamic, reflecting changing life circumstances and market opportunities. You can confidently navigate your FIA journey by understanding the why and how of reallocation, backed by real-life examples. Remember, in the vast financial universe, you’re the star. Shine bright by making informed, people-first decisions.

Reallocate Funds In A Fixed Indexed Annuity

Frequently Asked Questions

When can you reallocate funds in an indexed annuity?

The ability to reallocate funds in an indexed annuity varies by contract terms. Some allow annual reallocations, while others have specific windows or restrictions. Understanding your contract’s provisions and consulting a financial advisor is crucial for making informed decisions.

How often should you rebalance index fund annuities?

The frequency of rebalancing index fund annuities depends on your financial goals, market conditions, and contract terms. Some experts recommend an annual or bi-annual review. Always consult your financial advisor to determine the best strategy for your specific circumstances.

What are the differences between a fixed annuity and a fixed-indexed annuity?

A fixed annuity offers a guaranteed interest rate, providing consistent, risk-free returns. A fixed-indexed annuity ties returns to a market index, offering more growth potential, complexity, and usually higher fees.

How often can you rebalance your indexed annuities?

The frequency for rebalancing indexed annuities depends on your contract terms. Some allow for annual reallocation, while others may have more restrictive timelines or conditions. Always review your contract and consult a financial advisor for personalized guidance on rebalancing options.

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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