This page will not tell you to buy a fixed indexed annuity. It will tell you which facts have to be true before the product even matches the job people hire it for. If a fact is missing, the honest answer is “not yet,” not a nudge toward a signature.

Can you leave the money through the surrender period?

The SEC describes surrender periods as often six to ten years or longer. You can get back less than you paid if you leave early. If the money is an emergency fund, a house down payment, or tuition due in a few years, the contract’s design fights the purpose. A free-withdrawal clause, which the NAIC says some contracts have, for example on withdrawals of 10 percent or less, is not a plan for needing the whole balance. Write the year you might need the money next to the year the charge reaches zero. If the first year is earlier, stop or choose a different tool.

Do you understand what is not guaranteed?

You should be able to explain, in your own words, that you do not own the index, that dividends are usually excluded, and that a cap, participation rate, or spread can limit a positive year. You should be able to say that a down year typically credits zero if you do not withdraw, which is not the same as a gain. You should know that the insurer may change the limits later. If the explanation you would give a friend still includes “I can’t lose money” or “it earns what the market earns,” you do not understand the contract yet. Those sentences are false in the way the SEC and FINRA use the words. Reread how they work and the limiter page before you sit down with a producer.

Is the tax story actually yours?

Deferral matters more for nonqualified money that would otherwise be taxed every year. It usually does not add deferral inside an IRA or a 401(k). If you are under 59½, a taxable withdrawal may face an additional 10 percent tax unless an exception in the Form 5329 instructions applies. Do not import a 401(k) exception about leaving your job. If the annuity would hold traditional IRA money, required distributions generally start at 73, and a surrender charge can apply to a withdrawal you are required to take. Roth IRA owners are not required to take those lifetime distributions. Match the account type before you match the brochure.

Are you replacing something, or starting fresh?

A replacement can be a tax-free 1035 exchange only if it moves from insurer to insurer. If you receive the check, Revenue Ruling 2007-24 says it is not a 1035 exchange. Either path can start a new surrender schedule. Ask what you lose on the old contract: remaining surrender charges, a guaranteed rate you already have, a death benefit, or a rider that has already been paid for. “New bonus” is not a complete answer. The bonus page explains why.

Do you need income, or do you need an account?

If you need a guaranteed paycheck that can continue after the account is empty, you are talking about annuitization or an income rider, and the rider has a cost the NAIC does not standardize. If you need a lump sum on a known date, a rider’s income base is the wrong number to plan around. If you need neither, you may be paying for an option you will not use. Compare the idea with a declared-rate fixed annuity and with an FDIC-insured CD, using the fixed and CD pages, before you treat the indexed contract as the default.

Who should be in the room?

A licensed insurance producer can sell the contract. In many states that producer must act under a best-interest suitability rule based on NAIC Model 275. That rule, where it is in force, is not the same thing as a fiduciary duty. The model says it does not by itself create a private lawsuit or a fiduciary obligation. New York is not on the NAIC’s August 8, 2025 list of 49 jurisdictions that had implemented the 2020 revisions; New York has its own Regulation 187. None of that substitutes for reading the contract. A tax advisor is a separate person from the producer. This website is neither.

If you can answer the questions above with the specimen contract in front of you, you are in a position to decide. The decision is still yours. Questions to ask is the checklist version of this page.

Sources

Not advice. IndexedAnnuity.com is not an insurance company, agency, broker-dealer, or tax advisor. Nothing here is a recommendation to buy, hold, or replace a contract. Guarantees exist only in a specific contract and depend on the insurer’s ability to pay. Products and state laws differ. Read the contract.
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