Who's Who in a FIA?
What is a Fixed
Retirees can gain a lot by understanding fixed indexed annuities, otherwise known as FIAs. Essentially, an FIA is a contract between you and an insurance company. This agreement explains all the specifics of the annuity insurance product you’ve purchased.
It also establishes the terms of your annuity contract. The rights and responsibilities of each party, for example. It also explains how long your money needs to stay in the annuity to increase, and when the money can be paid out.
Additionally, you may have questions for us.
What are the Roles in a Fixed Indexed Annuity?
Three (sometimes four) main roles exist in regards to annuity contracts, specifically when to comes to FIAs. It’s also important to note that you should have an insurance professional that understands fully annuities on your side. That being said, these are the four roles involved in the annuity process:
This is the company that issues the annuity and is responsible for backing its guarantees.
The contract owner and annuitant are usually the same people. There are, however, cases where they’re two different people. The contract owner is the person who makes decisions about the annuity, such as who the beneficiaries are. The annuitant, meanwhile, is the person whose life expectancy is used to calculate the annuity payment. Again, the contract owner and annuitant are usually the same people, but sometimes aren’t.
A beneficiary is a person who receives a death benefit when the annuitant dies. It’s important that you name at least one beneficiary. without one, the money in your annuity is subject to probate. A death benefit can be paid without probate.
More Details Regarding Fixed Indexed Annuities
So, what is a fixed indexed annuity in terms of the more minute details? The life insurance company will explain all of your annuity details in your contract based on which type of annuity you have, whether it’s a fixed indexed annuity or a variable annuity. The contract also lays out the terms and periods, like the period in which your annuity can grow without withdrawing money. If you need to access your money sooner, however, very few options work in your favor. It’s important to note that a surrender period exists for every annuity, meaning early withdrawal during that period will result in a fee or surrender charge.
There are many options available to you, the retiree, when it comes to annuities. This is why it’s important to speak to professionals if you’re confused about what a fixed indexed annuity is.