Annuities:
Who's Who in an FIA
What is a Fixed Indexed Annuity?
A fixed indexed annuity (or FIA) is a contract between an individual and an insurance company. The contract describes the terms of their partnership. As a result, the terms of the contract establish each party’s rights and responsibilities, how long the money must remain in the annuity, how the interest rate is calculated, and so on. With an FIA, you may be able to secure a source of guaranteed* lifetime income. An annuity can be set up to provide you with a reasonable rate of return** while also guaranteeing* principal protection, regardless of market fluctuations.
Does an FIA Come With a Death Benefit?
Certain annuity contracts, including FIAs, provide a death benefit to your spouse or other beneficiaries. You have multiple options when it comes to a death benefit. For example, you may choose to have the death benefit received in one single payment. Alternatively, you might have it set up such that your spouse receives money in a series of regular payments. Whatever choice you go with, make sure you grasp all of the details. In fact, we’d be happy to answer your questions and explain how a fixed indexed annuity works. However, other specifics depend on the individual contract and how it is structured.
Who's Who in a Fixed Indexed Annuity?
Three (sometimes four) parties are involved in an FIA contract. These four roles are as follows:
- The issuing insurance company that issues the annuity and backs its claims
- The contract owner, who purchases and contributes the money to the annuity (you, if you decide to purchase one)
- The annuitant, who receives the payout from the annuity (typically, the contract owner and annuitant are the same person, but can sometimes be different)
- The beneficiaries, who receive a death benefit from the annuity after the annuitant passes away