What Are The Pros and Cons of Registered Index Linked Annuities?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Pros and Cons of Registered Index-Linked Annuities (RILAs)

Pros of RILAs

  1. Higher Growth Potential: RILAs offer the potential for higher returns linked to the performance of a market index.
  2. Customizable Risk Levels: Investors can choose their level of risk exposure, balancing potential gains and losses.
  3. Partial Protection: They provide some protection against market downturns, ensuring a portion of the invested capital is safe.
  4. Tax Deferral: Like other annuities, RILAs offer tax-deferred growth, meaning taxes are not paid on the earnings until withdrawal.

Cons of RILAs

  1. Complexity: RILAs are more complex than traditional annuities, making them harder to understand for some investors.
  2. Limited Protection: The protection against market loss is partial, not full, exposing the investor to some market risk.
  3. Caps on Returns: There are often caps on the maximum return, limiting the growth potential in a booming market.
  4. Fees and Charges: RILAs may come with higher fees and charges compared to other annuity products.

Why Fixed Indexed Annuities Might Be a Better Choice

  1. Simplicity: Fixed indexed annuities are less complex and easier to understand.
  2. Guaranteed Returns: They provide a guaranteed minimum return, offering more security for your investment.
  3. Lower Risk: Fixed indexed annuities carry lower risk compared to RILAs, as they are not directly invested in the stock market.
  4. Steady Income: They can provide a steady, predictable income stream, which is beneficial for retirement planning.

Comparing FIA and RILA’s

FeatureRILAFixed Indexed Annuity
Potential for High ReturnsHigher, linked to market indexLower, but with minimum guaranteed rate
ComplexityMore complexSimpler and more straightforward
Market Risk ExposurePartial protection from market downturnsLower risk, not directly market-linked
Investment SecurityPartial market protectionGuaranteed minimum return
FeesPotentially higher feesGenerally lower fees


While Registered Index-Linked Annuities offer the potential for higher returns and customizable risk levels, they come with increased complexity and partial market risk exposure. Fixed Indexed Annuities, on the other hand, provide a simpler, lower-risk investment option with guaranteed returns, making them a more suitable choice for those seeking a secure and steady income for retirement. If you’re considering an annuity, Fixed Indexed Annuities might be the safer and more understandable choice. Contact us today for a free quote.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, 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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