01 / PROTECTION
What is protected—and by whom?
An FIA’s index-crediting floor generally prevents negative credited interest caused by a falling index. That is different from a promise that every dollar is always available without a reduction. Withdrawals, surrender charges, applicable fees, and adjustments can reduce what you receive.
Guarantees depend on the issuing insurer’s financial strength and claims-paying ability. An FIA is an insurance contract, not a bank deposit or a direct investment in an index. NAIC guide
Ask before deciding“Which values are guaranteed, and what could reduce my cash surrender value?”
02 / GROWTH
How does an index gain become interest?
The index’s return and your credited interest are different numbers. A cap can limit interest; a participation rate determines how much of an index increase enters the calculation; a spread may be subtracted. Crediting methods vary, and renewal terms may change within contractual limits. Index calculations commonly exclude dividends.
For a simplified one-year example, an 8% index increase with a 5% cap and 100% participation would credit 5%, assuming no other adjustments. This is arithmetic, not a current rate offer or a forecast. SEC investor bulletin
Ask before deciding“Show me how this exact strategy credits interest—and which terms can change.”
03 / ACCESS
When might you need the money?
FIAs are generally designed for longer holding periods. A contract may permit limited withdrawals without surrender charges, but amounts and timing vary. Larger or earlier withdrawals can trigger charges. A market value adjustment, where applicable, may increase or decrease the amount paid out.
Separate money for near-term expenses and emergencies before considering a long-term commitment. Compare the surrender schedule with your real spending needs—not just your intended retirement date. FINRA overview
Ask before deciding“If I need a substantial withdrawal in year two, what would I actually receive?”
04 / INCOME
What turns savings into income?
Some FIAs offer optional lifetime withdrawal benefits, often at an additional cost. An income benefit base used to calculate payments is not necessarily your cash value and generally cannot be withdrawn as a lump sum.
Understand the payment start date, the cost of the benefit, and the effect of excess withdrawals. Compare available income choices using the actual contract rather than a highlighted growth figure. An insurer’s example of a benefit base (for illustration, not a product recommendation).
Ask before deciding“Which number is my money, which number calculates income, and what conditions preserve the benefit?”
05 / FIT
What job would this money do?
Write down the purpose of the money before comparing products: future income, a reserve for uncertain expenses, or long-term growth. Then ask whether the contract’s restrictions support that purpose. A protection feature alone does not establish suitability.
An annuity within an IRA does not add tax deferral to the IRA’s existing tax treatment. Any decision should account for your broader finances and the specific account involved. NAIC guide
Ask before deciding“Why would this contract fit my goals better than the alternatives, including keeping my current arrangement?”
