In "normal" stock market investing, the range of outcomes is unlimited in terms of gains and losses. For those who would rather reduce the volatility and eliminate stock market risk, there are a number of types of structured products that create a predetermined set of outcomes. For our purposes here, we will focus on the structured outcomes in a fixed index-linked annuity (FIA).
When using an FIA, one chooses an index to which one's money is "linked," meaning one's gains are determined by whether the price of that index increases. One's funds are not actually invested into the stock market itself. Using the simplest crediting strategies, if the price index goes up, your account is credited with 100% of the gain up to a maximum or "cap," and that new value can't be lost in subsequent years. Future gains compound on any previous gains. Conversely, if the stock market price index declines -5% or -50% in a contract year, your account won't lose. Currently,* caps for accounts linked to the S&P 500 price index may be in the 9% - 12% range depending on amount deposited, the company, the index, and terms selected.
FIAs allow investors to safely profit from potentially rising prices of major stock market indexes while providing full protection from downside losses.
FIAs have no upfront charges and don't charge a yearly fee (unless income riders are added). While some have restrictions/charges on withdrawals during the contracts term, others offer full liquidity with no penalties.^ Most all companies offer yearly withdrawal options and, usually, no charge withdrawals in the event of death, terminal illness, and long term care (see the disclosures for details). Due to the restrictions, there are certain suitability guidelines that must be met. Not all investors are candidates for an FIA.
Please click on the short video above to learn more. Below is an easy to understand analysis of S&P 500 price returns since 1928. Please read to understand the power of today's structured outcome FIAs.
*As of 03.10.2025
^There may be a "market value adjustment" positive or negative depending on interest rate fluctuations. See policy disclosures for details.
Since an FIA credits gains when the price of the chosen stock market index increases in value during the contract year, it makes sense to wonder how often the most used index, the S&P 500*^, goes up during 1 year periods. Since 1928, the price index has increased in 64 of 96 years (about 66%). Returns of 11% or better have occurred in 47 of those years (49%) and 7.06% or better in 9 of those years. So, in 58% of the years, the index has increased 7.06% or better.**
Using rolling 7 year periods, of which there now have been 89, the index has experienced the following:
While one can't make predictions of future returns, if the next 7 years were "average," an FIA with a point to point crediting method and an 11% yearly cap, would return 11% in 3 or 4 of the years and 7% or better in 1 or 2 of the years. In 2 or 3 of the years, the price index would be negative and your funds and any gains would be safe and secure. If, in 3 of the years the price indexed gained 11% or better, and 1 of the years the gain was 7%, the compounded 7 year total return would be about 46%. Of course, there are no certainties this would occur and this is just for illustration purposes only. Your results may be better or worse and in no circumstances would you incur stock market losses.
*Source for all data: https://www.slickcharts.com/sp500/returns/details
**Data analysis as of 10.25.2023
*^The S&P 500 is a trademark of the Standard and Poor's Co. and consists of the 500 largest US based companies. One can't invest directly into the index.
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