What to Know Before You Buy a Fixed Indexed Annuity (FIA)
A Fixed Indexed Annuity (FIA) is a retirement solution designed to help you grow and protect your savings through guaranteed features backed by the issuing insurer. Before purchasing an FIA, it’s important to understand how the product works, how interest is credited, and how its features can potentially support your long-term goals. Below are key factors to consider when evaluating whether an FIA is right for you.
1. Understand How FIAs Work
FIAs offer a blend of principal protection and growth potential tied to the performance of an external market index. Unlike direct market investments, FIAs do not participate in market losses, which may help reduce volatility in your retirement strategy. Interest credited is subject to caps, participation rates, spreads, and other contract provisions, and FIAs do not directly invest in the underlying index.
To learn more about FIA fundamentals, you may also like:
▸ What Is a Fixed Indexed Annuity?
For a broader overview of how annuities work:
▸ Annuities Guide: Types, Benefits, and How They Work
2. Know Your Financial Goals
Your financial goals are central to choosing a product that fits your needs. Consider questions such as:
- Are you looking for long-term, tax-deferred growth?
- Do you want income options in retirement?
- Are you seeking to diversify your retirement portfolio with an option that helps protect principal?
To see how annuities fit into retirement planning overall:
▸ The Role of Annuities in a Diversified Retirement Portfolio
If you’re building or refining your long-term strategy:
▸ Planning for a More Confident Retirement
3. Evaluate Crediting Strategies
FIAs use different approaches to determine how interest is credited. Common strategies include:
- Point-to-Point
- Participation Rates
- Cap Rates
- Spreads
Each method works differently and can impact your overall credited interest. Interest credited will never reflect the full return of the index and will not be negative due to index performance.
For a clear explanation of how FIA indexing and crediting strategies work:
▸ Understanding FIA Indexing Strategies
To explore the tradeoffs and advantages FIAs can offer:
▸ Fixed Indexed Annuity Pros and Cons
4. Understand the Surrender Period
FIAs are designed for long-term planning. Most include a surrender period, during which early withdrawals above the penalty-free allowance may be subject to surrender charges.
If you’re comparing FIAs with fixed, accumulation-focused alternatives:
▸ Pros and Cons of Multi-Year Guaranteed Annuities (MYGAs)
5. Assess Liquidity Options
While FIAs encourage long-term saving, many offer liquidity features such as:
- Annual penalty-free withdrawals up to a contract-specified percentage
- Access under qualifying events, such as nursing home or terminal illness waivers
- Full liquidity for beneficiaries upon the annuitant’s death
If you’re exploring guaranteed-rate products that emphasize accumulation:
▸ What Is a Multi-Year Guaranteed Annuity (MYGA)?
6. Evaluate Optional Riders
Some FIAs offer optional contract riders, which may provide:
- Lifetime income features
- Additional guarantees depending on the product
- Enhanced benefits for specific needs
These features may come with an additional cost. A financial professional can help you determine whether they align with your goals.
7. Compare Financial Strength of Insurers
Financial strength ratings indicate an insurance company’s ability to meet its long-term obligations. Choosing a highly rated insurer can provide additional confidence as you plan for retirement.
Oceanview Life holds an A (Excellent) rating from A.M. Best, reflecting our commitment to long-term financial stability.
Learn more:
▸ Oceanview Ratings & Financial Strength
8. Ask About Fees and Charges
Many FIAs have no direct product fees, but certain interest crediting strategies or optional riders may involve costs. Your financial professional can help you understand how any charges apply to your contract. As with any annuity, withdrawals may be subject to taxes and potential IRS penalties if taken before age 59½.
9. Consult a Financial Professional
A licensed financial professional can help you compare options, assess features, and build a strategy that supports your retirement objectives.
Discover the Oceanview Difference
Financial Strength You Can Trust: Rated A (Excellent) by A.M. Best, demonstrating our strong financial foundation and long-term commitment to policyholders.
Simple, Transparent Retirement Solutions: Our annuity products are designed to be clear, straightforward, and supportive of your long-term goals.
Explore Oceanview Annuity Products
Competitive Rates and Flexibility: Take advantage of competitive credited interest rates and multiple durations designed to meet a range of retirement needs.
Client-Centric Approach: Penalty-free withdrawals, nursing home and terminal illness waivers, and liquidity for beneficiaries may be available, depending on the product.
Learn More About Our Product Features
Disclaimers
Annuities issued by Oceanview Life and Annuity Company, 1331 17th St., Suite 1050, Denver, CO 80202. In California, doing business as Oceanview Life and Annuity Insurance Company www.oceanviewlife.com.
HARBOURVIEW 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 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.
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.
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.
While care was taken in preparing this information and it is considered reliable, contract, application, illustration, and product disclosure language should be relied upon when contrary. The Company reserves the right to correct any typographical errors that may exist.
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.