What to Know Before You Buy a Fixed Indexed Annuity (FIA)

A Fixed Indexed Annuity (FIA) is a powerful financial tool that can help you grow and protect your retirement savings. However, like any investment, it’s important to fully understand the product and how it aligns with your financial goals before making a purchase. Here are key factors to consider before buying a FIA.

1. Understand How FIAs Work

FIAs are designed to provide a combination of growth potential and principal protection:

• Growth Linked to a Market Index: Interest is credited based on the performance of a market index, such as the S&P 500.
• Principal Protection: Your initial premium is protected, even if the market performs poorly.
• Tax Treatment: Earnings grow tax-deferred based on the current tax code, meaning you won’t pay taxes until you make withdrawals. Withdrawals are generally taxed at ordinary income rates. 

2. Know Your Financial Goals

Determine what you want to achieve with an FIA:

• Are you looking for steady, tax-deferred growth?
• Do you want guaranteed income in retirement?
• Are you seeking to diversify your portfolio and reduce overall risk?

Understanding your goals will help you choose a FIA with the right features.

3. Evaluate Crediting Strategies

FIAs offer various crediting strategies to calculate interest:

• Point-to-Point: Measures index performance over a specified period, such as one or two years.
• Participation Rate: Determines what percentage of the index’s growth is credited to your account.
• Cap Rate: Sets a maximum limit on the interest you can earn.
• Spread: Deducts a fee from the index’s growth before crediting interest.

Ask your financial professional to explain how these strategies work and their potential impact on your returns.

4. Understand the Surrender Period

FIAs typically have a surrender period, during which early withdrawals may incur surrender charges:

• Surrender periods can range from 2 to 10 years or more.
• Be sure to understand the terms and ensure you won’t need access to the funds before the period ends.

5. Assess Liquidity Options

While FIAs are designed for long-term savings, they often offer some liquidity:

• Many FIAs allow penalty-free withdrawals of up to a certain percentage annually.
• Additional features, such as nursing home or terminal illness waivers, may provide access to funds in specific situations.

6. Evaluate Optional Riders

Optional riders can enhance your FIA, but they may come with additional costs:

• Guaranteed Lifetime Income: Provides a steady income stream in retirement.
• Long-Term Care Riders: Offer benefits for qualified long-term care expenses.

Consider whether these features align with your financial needs and goals.

7. Compare Financial Strength of Insurers

Choose a FIA from a reputable insurance company with a strong financial rating:

• Look for ratings from agencies like A.M. Best.
• A strong rating ensures the insurer can meet its obligations.

8. Ask About Fees and Charges

Understand any fees associated with the FIA:

• While many FIAs have no direct fees, optional riders or spread fees may apply.
• Be sure to clarify all costs with your financial professional.

9. Consult a Financial Professional

FIAs can be complex, and working with a knowledgeable financial professional can help you:

• Understand the product’s features and benefits.
• Compare options to find the best FIA for your needs.
• Align the FIA with your overall financial plan.

Discover the Oceanview Difference

• Financial Strength You Can Trust: Rated “A” (Excellent) by A.M. Best, showcasing our solid financial foundation, providing you with confidence regarding Oceanview’s commitment to meeting obligations.
• Simple, Transparent Retirement Solutions: Straightforward annuity products designed to help you meet your retirement objectives.
• Competitive Rates and Flexibility: Benefit from competitive rates and a variety of durations and crediting strategies.
• Client-Centric Approach: Features such as free withdrawals, nursing home and terminal illness waivers, and full liquidity for beneficiaries upon the annuitant’s death demonstrate our commitment to your financial security and peace of mind.

Disclaimers

Annuities issued by Oceanview Life and Annuity Company, 1819 Wazee Street, 2nd Floor, 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.