Which Allocation Should You Pick for Your Indexed Annuity?

Shawn Plummer

CEO, The Annuity Expert

Which Allocation Should You Pick for Your Indexed Annuity?

Choosing the right allocation for your indexed annuity is crucial for optimizing your investment. Here’s a guide to help you make an informed decision.

Understanding Index Options

1. Household Indexes:

  • Examples: S&P 500, Nasdaq, Dow Jones
  • Benefits: Well-known, tracks the largest and most established companies.

2. Caps and Participation Rates:

  • No Cap: Allows for unlimited growth potential.
  • Participation Rate: Determines how much of the index gain is credited to your annuity.

Get a clear view of your annuity’s value with our comprehensive annuity payout calculator.

Recommended Strategies

  1. Annual Point-to-Point:
    • What is it? Measures the change in the index from one specific date to the same date the next year.
    • Advantage: Potential to capture gains annually.
  2. Two-Year Point-to-Point:
    • For Longer Reset Periods: Only if you prefer a longer-term approach.
    • Limitation: Avoid going beyond a two-year reset period.

The K.I.S.S. Method

  • Keep It Simple, Stupid: Simplifies decision-making by focusing on tried-and-true indexes and straightforward strategies.

Making the Right Choice

  • Assess Your Financial Goals: Align your annuity choice with your long-term financial objectives.
  • Understand the Risks: Be aware of the potential downsides, like market volatility affecting indexes.


Selecting the right allocation in an indexed annuity involves balancing growth potential with your financial goals and risk tolerance. Opting for well-known indexes like the S&P 500, Nasdaq, or Dow Jones without a cap and a suitable participation rate can offer significant advantages. Remember, simplicity is key, and sticking to annual or, at most, two-year point-to-point strategies can keep your investments straightforward yet effective. Contact us today for a free quote.

Need Help Buying An Indexed Annuity?

Get help from a licensed financial professional. This service is free of charge.

Contact Us

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

Scroll to Top