The ABCs of FIAs
April 10, 2019 by Jim Poolman
A Conversation with Jim Poolman
[Financial Poise Editor’s Note: Jim Poolman is Executive Director of the Indexed Annuity Leadership Council, a coalition of life insurance companies that offer fixed indexed annuities (FIAs). He outlined the benefits of this stable retirement savings vehicle for the readers of Financial Poise.]
What are Fixed Index Annuities (FIAs)?
FIAs are contracts between you and an insurance company. Regardless of market swings, this financial product guarantees a minimum rate of return for a fixed number of years. Interest is earned based in part on changes in a market index, which measures how the market–or part of the market–performs. Other characteristics of FIAs include no risk to your principal, tax-deferred growth, and the ability to create an income stream you can’t outlive. State insurance commissioners serve as the regulatory authority and states are required to have life insurance licenses to sell the product. For FIAs, the insurance company assumes the risk.
What is the Indexed Annuity Leadership Council (IALC)? How can it help retirement savers?
The IALC is a consortium of life insurance companies working together to educate retirement savers about the use of FIAs as part of any balanced financial retirement plan. Its mission is to help educate the public, including retirement savers, reporters, regulators and financial professionals about the benefits of FIAs.
These products provide a source of guaranteed income, principal protection, and interest rate stability in retirement. The IALC is also focused on educating Americans about retirement savings and planning by providing access to retirement tools, such as customizable calculations and retirement planning materials.
Why are FIAs a good choice for one’s retirement portfolio?
In March 2018, the Indexed Annuity Leadership Council conducted research on the state of America’s workforce, which found that nearly 80 percent of workers are, above all, looking for lifetime income. FIAs meet Americans’ number one retirement need by offering a steady, guaranteed, lifetime income stream. Additionally, FIAs are a key component of a diversified financial plan. They offer:
- Protection against stock market volatility
- Tax-deferred growth
- Portfolio balance
- Predictable earnings
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