Know Your Cap. Keep It for the entire Surrender Charge Period.
How a Fixed Cap Can Bring More Clarity to Retirement Planning
When planning for retirement, uncertainty is often one of the biggest challenges.
Markets fluctuate. Interest rates change. And for many individuals nearing or in retirement, it can be difficult to know what to expect from year to year. That’s why clarity, consistency, and predictability play such an important role in long-term retirement planning.
A Fixed Indexed Annuity (FIA) can help address these concerns by offering principal protection and tax-deferred growth potential tied to market performance—without direct participation in the stock market.
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Why Cap Rates Matter in a Fixed Indexed Annuity
In a fixed indexed annuity, index-linked interest is credited based on the performance of an external market index—such as the S&P 500®—subject to certain limits. One of the most important of these limits is the cap rate, which defines the maximum amount of interest that can be credited during a given period even if the underlying index or benchmark earns more.
In many traditional FIAs:
- Cap rates are declared annually
- Caps may increase or decrease each year
- Long-term planning can be affected by future cap rate changes
While this structure works for some, others prefer more certainty around how interest may be credited over time.
A Different Design: A Cap Set Once for the Surrender Charge Period
Some fixed indexed annuities are designed to remove some of this annual uncertainty.
With this approach, the cap rate is declared at the start of the contract and remains the same for the entire surrender charge period—such as five or seven years. There are no annual cap re-declarations and no mid-term adjustments during the surrender charge period for the selected strategy.
This design can support clearer planning because:
- The cap rate is known from day one
- The cap does not change throughout the selected term
- Expectations for interest crediting remain consistent under the stated crediting methodology
Interest, if any, is still based on index performance (excluding dividends). If the index return is negative, interest credited for that period may be zero—but contract value is not reduced due to market performance.
▸ Oceanview CapLock™ Fixed Indexed Annuity product page
Balancing Growth Potential and Principal Protection
A fixed indexed annuity with a locked cap is designed to balance several important retirement objectives:
- Growth potential linked to well-known market indices
- Protection of principal from market downturns due to index performance
- Transparency in how interest may be credited
While the cap rate itself is guaranteed to remain unchanged for the term, the amount of interest credited is not guaranteed and depends on index performance. These products are generally intended for long-term retirement planning and may not be appropriate for short-term needs due in part to surrender charges and potential withdrawal limitations.
▸ “What Is a Fixed Indexed Annuity?”
Who May Benefit from a Cap-Guaranteed Strategy?
A fixed indexed annuity with a cap set once for the full term may be appropriate for individuals who:
- Are approaching or in retirement
- Value predictability and consistency
- Want protection from market losses with growth potential rather than direct market participation
- Prefer straightforward product designs
- Are comfortable committing funds for a defined period
- Clients focused on long-term planning and predictability
Every retirement plan is unique. Product suitability depends on individual financial goals, time horizon, and liquidity needs and should be evaluated with a financial professional.
Planning with Confidence Starts with Clarity
Retirement planning doesn’t have to mean choosing between growth potential and peace of mind.
For some individuals, a fixed indexed annuity with a cap declared once and held for the full term can provide a clearer, more predictable way to plan—combining principal protection, market-linked growth potential, and consistency within defined contract limits.
A financial professional can help determine whether this type of annuity design fits into your broader retirement strategy.
Knowing your cap—and keeping it for the full surrender charge period—can help turn uncertainty into confidence.
FOR FINANCIAL PROFESSIONALS USE ONLY. Not to be distributed to the general public. The Single Premium Fixed Indexed Annuity Contract [ICC19 OLA FIA], or variations of such are issued by Oceanview Life and Annuity Company (d/b/a Oceanview Life and Annuity Insurance Company in California). May not be available in all states. Not available in the state of New York or Vermont. Product features, limitations and availability may vary.
OCEANVIEW ANNUITIES ARE PRODUCTS OF THE INSURANCE INDUSTRY AND NOT GUARANTEED BY ANY BANK NOR INSURED BY THE FDIC OR NCUA/NCUSIF OR ANY OTHER FEDERAL GOVERNMENTAL AGENCY. MAY LOSE VALUE. NO BANK/CREDIT UNION GUARANTEE. NOT A DEPOSIT. MAY ONLY BE OFFERED BY A LICENSED INSURANCE AGENT. GUARANTEES ARE SUBJECT TO THE CLAIM PAYING ABILITY OF THE ISSUING INSURANCE COMPANY.
Annuities issued by Oceanview Life and Annuity Company, 1331 17th Street, Suite 1050, Denver, CO 80202. In California, doing business as Oceanview Life and Annuity Insurance Company www.oceanviewlife.com.
Annuities are generally designed as long-term retirement solutions and have certain limitations. They are generally not intended to replace emergency funds, serve as income for day-to-day expenses, or support short-term savings goals. Please review the contract for full details.
A.M. Best Rating as of December 11, 2024, is subject to change. A (Excellent) rating is third highest of fifteen possible rating classes for financial strength. The outlook assigned to these Credit Ratings is stable.
As each client and prospective client’s financial needs differ, care should be taken in making any recommendation to purchase an annuity. Therefore, nothing in this document should be read as investment advice.
This material is a general description intended for general public, educational use. Oceanview Life and Annuity Company is not providing investment advice for any individual or in any individual situation, and therefore nothing in this correspondence should be read as such.
Neither Oceanview Life and Annuity Company nor any of its representatives may provide tax or legal advice.
Withdrawals in excess of any Free Partial Withdrawal amounts are subject to a Surrender Charge and Market Value Adjustment (MVA). The MVA may have the effect of increasing or decreasing the Surrender Value of the withdrawal depending on the market interest rate changes.
The IRS may impose a penalty for withdrawals prior to age 59 ½.
Contracts purchased in an IRA or other tax-qualified plan provide no additional tax-deferral benefit, since they are already afforded tax-deferred status. All annuity features, risks, limitations, and costs should be considered prior to purchasing an annuity within a tax-qualified retirement plan. For non-qualified annuities, tax deferral is not available to corporations and certain other entities.
Issue age for all deferred annuities is the age of the last birthday of the Owner. If joint owners, age of oldest determines commission payout.
Rates, renewal caps, and declared interest rates, will always follow contract provisions relative to minimums and maximums stated. Oceanview determines, at its discretion, the rates, renewal caps and, declared interest rates above the contractual minimums that are guaranteed. Funds allocated to an index do not directly participate or invest in the stock market or any index.