Understand Your Options
Who's Who In An FIA?
Knowledge Is the First Step to a Confident Retirement
Understand the Basics
Who’s Who in An FIA: Fixed Index Annuities Explained
Retirees can gain a lot by understanding fixed index annuities (FIAs). Simply put, a fixed index annuity (FIA) is a contract between both you and the insurance company. Basically, this agreement goes over the specifics of the annuity insurance product you purchased.
It also confirms the terms of your annuity. These terms include the rights and responsibilities of each party. In addition, it highlights how long the money needs to stay in the annuity to increase and when the money can be paid out.
Four Roles explained
Who's Who in an FIA?
There are four roles that exist when it comes to annuity contracts, especially when it comes to fixed index annuities (FIAs). It is also important to have an insurance professional on your side who completely understands annuities. Those that are included in the annuity process are:
Insurance Company
This is the company that issues the annuity. They are responsible for backing the guarantees of the annuity.
Contract Owner
Usually, the contract owner and annuitant are the same person, but sometimes they are different people. The owner is the person who makes decisions about the annuity, like who the beneficiaries are.
Annuitant
The annuitant is the person whose life expectancy is used to calculate the annuity payment. This could be the same person as the contract owner, but in some cases, it may be someone different.
Beneficiary
When you die your beneficiary is the person that receives your death benefit. It’s important to name one or more beneficiaries. That’s because, without one, the money in your annuity is subject to probate. A death benefit can be paid without probate.
Key Details to Understand
Fixed Index Annuities Explained
In your contract, the life insurance company will explain all your annuity details. For example, the contract will specify which type of annuity you have like an FIA, fixed annuity, or variable annuity. In addition, the contract will lay out terms and time periods. An example of this is the certain time period for that which your annuity can grow without withdrawing money. However, if you need access to your money sooner, there are few options that can work in your favor. It is important to note that an annuity has a surrender period that exists for every annuity. That means early withdrawal during that period of time will result in a fee or surrender charge.
