An indexed annuity lets you participate in stock market gains without ever putting your retirement savings at risk of loss. Issued by an insurance company and backed by their claims-paying ability, an indexed annuity grows your money based on the performance of a market index — typically the S&P 500 — while a guaranteed 0% floor ensures your account value never declines due to a market downturn, even in catastrophic years like 2000, 2008, or 2022. It is one of the most powerful tools available for building a secure retirement income stream.
What Does an Indexed Annuity Include?
- Indexed interest credits based on S&P 500 or other major index performance
- 0% floor — account balance is fully protected from negative index returns in any year
- Tax-deferred growth with no annual 1099 on accumulating gains
- Optional guaranteed lifetime withdrawal benefit (GLWB) rider for lifetime income
- Death benefit paid to named beneficiaries, bypassing probate
- Penalty-free withdrawal provisions — typically 10% of account value per year after year 1
- Multiple index allocation strategies (annual point-to-point, monthly averaging, etc.)
- 1035 exchange eligibility to roll funds from another annuity tax-free
The Power of Avoiding a Bad Year
In a year when the S&P 500 drops 25% — like 2008 — an indexed annuity earns 0% instead of losing 25%. Over a 10-year accumulation period, avoiding even one major loss year can dramatically improve your final account balance compared to a directly invested portfolio of the same size. The math of loss avoidance is more powerful than most investors realize: a 25% loss requires a 33% gain just to break even.
Cap Rates, Participation Rates, and Spreads Explained
When the S&P 500 gains 15% in a year, you do not automatically earn 15% in your annuity. The insurer limits your upside through one of three mechanisms: a cap rate (you earn up to a maximum, e.g., 8%), a participation rate (you receive a percentage of the index gain, e.g., 60% of 15% = 9%), or a spread (the insurer’s fee is subtracted, e.g., 15% minus a 3% spread = 12%). Each carrier and product has different rates — and these rates change over time. Our agents at Insure USA, Inc. will help you compare current offerings across multiple carriers to find the best terms available today.
Get an Indexed Annuity Quote in Orlando, Florida
Insure USA, Inc. is an independent insurance agency serving Orlando and all of Florida. We compare indexed annuity options from multiple top-rated carriers to find the right accumulation strategy and income options for your retirement goals. Call us at (321) 235-7377 or request a free quote online.