Annuities:
Who's Who in an FIA
Annuities
What is a Fixed Indexed Annuity
A fixed indexed annuity (FIA) is a contract with an insurance company. The contract defines the terms of the agreement. So, the terms of the individual contract establish the rights and duties of each party, how long the money needs to stay in the annuity, how the interest rate is calculated, and other details. Certain annuity contracts can provide a lifetime income stream. They can be set up so that you can earn a reasonable rate of return** while also receiving guaranteed* principal protection, independent of what happens in the stock market.
Does an Annuity Come With a Death Benefit?
Certain annuity products, including FIAs, provide a death benefit to your spouse or other beneficiaries. Additionally, you have several options for a death benefit. For example, you may choose to have the death benefit paid in one single payment. However, you might arrange for it to be paid to your spouse as a series of regular payments. Whatever you choose, make sure you understand all of the details. In fact, we’d be happy to answer your questions and explain how an FIA operates. 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. The four roles are as follows:
- An insurance company issues the annuity and backs all of its claims
- The contract owner purchases and contributes the money to the annuity
- The annuitant receives the payout from the annuity (typically, the contract owner and the annuitant are the same person)
- The annuity’s beneficiaries receive a death benefit after the annuitant passes away
