Indexed annuity returns hinge on caps and participation rates, not one rate. Call 1-800-MEDIGAP to compare.
How are fixed indexed annuity rates determined?
Unlike a fixed annuity with one stated APY, a fixed indexed annuity credits growth based on the performance of an index such as the S&P 500, subject to limits. A cap sets the maximum credited gain in a period; a participation rate credits a percentage of the index's gain; and a spread or margin subtracts a set amount from the index return. A guaranteed floor, often zero percent, protects your principal so you never lose money to market drops. Because these mechanics differ by contract, two annuities tied to the same index can credit very different amounts. To compare crediting methods accurately, call 1-800-MEDIGAP for a side-by-side review.
How do you compare indexed annuity rates fairly?
Comparing fixed indexed annuities means looking past headline numbers to the crediting structure. Ask for the current cap, participation rate, and spread on each index option, and check whether those terms are guaranteed or can be lowered by the insurer after the first year. Review the available indexes and crediting periods (annual point-to-point is common), the surrender schedule, and any rider fees for income guarantees. Also weigh the carrier's financial strength, prioritizing A-rated insurers. Because these contracts are complex, unbiased guidance matters. A 1-800-MEDIGAP specialist can lay out caps, participation rates, and protections across carriers so you compare apples to apples.