Tailoring Fixed Index Annuities to Your Specific Goals

Welcome to Shootin’ It Straight with Stan. I’m Stan The Annuity Man, America’s Annuity Agent, licensed in all 50 states. Today’s topic: tailoring Fixed Index Annuities to meet your specific goals.

Now, a lot of you have watched hundreds, maybe even thousands of my videos and think, “Wait a minute, Stan, I thought you didn’t like Indexed Annuities.” Nothing could be further from the truth. I’m not against Indexed Annuities. I’m against how they’re sold and pitched. When presented honestly, they can fit the right situation beautifully.

A Quick History Lesson

Indexed Annuities were introduced back in 1995. Yes, I was around for that. They were created to compete with CD returns and designed to offer slightly better interest if caps, spreads, and participation rates work in your favor. But here’s the truth: Indexed Annuities are Fixed Annuities. They’re life insurance products, not securities. They’re regulated by state insurance departments, not FINRA.

They were never designed to chase markets. They were designed to protect your principal while providing CD-type growth potential.

The Bonus Trap

Let’s talk about the big red flag, the upfront bonus.

You’ve probably seen this at bad chicken dinners or overpriced steak seminars: someone promises a 10% bonus just for signing up. I call that candy for the stupid.

If someone’s giving you an upfront bonus, you need to ask where that money’s coming from. There are 100 pennies in every dollar. That “bonus” isn’t free. It’s built into the contract, and usually, the non-bonus version of the same product offers a higher payout.

In other words, the shiny thing isn’t always the smart thing.

The P.I.L.L. Framework

At The Annuity Man, everything starts with two questions:

1. What do you want the money to contractually do?
2. When do you want those contractual guarantees to start?

Then we go to the P.I.L.L. test:

• P: Principal protection
• I: Income for life
• L: Legacy
• L: Long-term care or confinement care

If your goal doesn’t fall under one or more of those four categories, you don’t need an annuity, Indexed or otherwise. Notice what’s missing: there’s no G for growth or M for market. Indexed Annuities are not market products. Don’t buy one expecting stock market like returns.

The Reality Check

If someone tells you an Indexed Annuity will give you market upside with no downside, stop them right there. If that were true, every major investment firm —Goldman Sachs, JP Morgan, and Morgan Stanley — would be buying them. They’re not.

These products are designed for stability, not speculation. If you’re looking for market growth, invest in stocks, ETFs, or mutual funds. If you want protection with slightly better-than-CD returns, then Indexed Annuities might fit.

Keep Expectations Real

If an agent shows you hypothetical charts of 7%, 8%, or 9% returns, they’re showing you back-tested dreams, not real-world results. The reality: Indexed Annuities typically deliver CD-like returns. The upside is limited by caps, spreads, and participation rates, all of which can change annually at the insurer’s discretion.

If you go in with a clear head—knowing your downside is zero and any upside will be modest—you’ll be happy. But if you buy into unicorn dreams, you’ll be disappointed.

Income Riders and Flexibility

Most people buy Indexed Annuities not for accumulation, but for Income Riders.

The Income Rider is the “will do” part of the contract—it guarantees lifetime income starting at a future date. For example, if you tell me you want income to start in seven years, we’ll shop every carrier to find the highest contractual payout.

And here’s the flexible part: if seven years pass and you decide you don’t need income anymore, you can pivot. You can surrender the Income Rider and take your accumulation value instead—typically earning 2–4%. That flexibility is a big plus.

Indexed Annuities vs. MYGAs

Indexed Annuities are great for principal protection with a bit of upside, but if you just want guaranteed interest, look at Multi-Year Guarantee Annuities (MYGAs).

MYGAs are the annuity industry’s purest CD alternative—simple, fixed, and transparent. Many times, a blend of MYGAs and Indexed Annuities works best, giving you a balanced mix of guarantees and potential upside.

The “Index” Illusion

Right now, there are more than 750 index option choices and over 50 proprietary indexes used in Indexed Annuities—many created out of thin air. Some agents will tell you, “If you’d owned this index for 10 years, look at your returns!”

The problem? That index didn’t even exist 10 years ago. Remember: Indexed Annuities track price changes, not total returns, and they don’t include dividends, which historically make up more than 50% of the S&P’s performance.

So again, don’t buy it for growth. Buy it for guarantees.

The Bottom Line

There’s nothing wrong with Indexed Annuities. There’s something wrong with how they’re sold. They’re complex, often high-commission products that need to be explained clearly. And if you can’t explain your contract to a nine-year-old, don’t buy it. Buy an annuity for what it will do, not what it might do.

That’s the truth about tailoring Indexed Annuities to your goals. Understand the guarantees, avoid the hype, and make decisions on your terms. I’m Stan The Annuity Man. Thanks for reading, and I’ll see you next time.