Fixed-Indexed Annuity Definition

A Fixed-Indexed Annuity is a fixed annuity that can combine – to a certain extent – some of the more popular features of both a fixed annuity and a variable annuity. On one hand, the Fixed-Indexed Annuity can credit earnings based on an index like the S&P 500 or the DOW. On the other hand, the Fixed-Indexed Annuity has a guaranteed minimum value during the entire term of the annuity. In other words, the consumer is getting some of the index gains but none of the losses. This is possible because Fixed-Indexed Annuities do not, generally speaking, credit 100% of the gains. The consumer only gets a percentage of the gains based on a participation rate, spread, and cap as discussed in detail earlier.