What are fixed indexed annuities?

A fixed indexed annuity is an investment that grows at the higher of a minimum guaranteed rate of return or the return from a chosen index, reports AnnuityFYI. The return is reduced by applicable fees and formulas.

A fixed indexed annuity is a contract with an insurance company, according to Fidelity Investments. The contract offers protection from declining markets and can provide an income for life with the purchase of riders. The amount of return based on the index depends on whether the company tracks index changes monthly, annually or longer. Other clauses in the annuity contract can impact the return, such as a cap on earnings, participation rate and any bonus clauses.