Returns tied to a market index with a floor of zero — and a ceiling that quietly caps most of the upside.
A hybrid accumulation product. Your credited return is linked to an index (like the S&P 500) but limited by a cap, participation rate, or spread, with a guarantee that you won't lose principal to market drops (a 0% floor). Complexity — and commissions — run high.
The word 'guaranteed' applies to your principal, not the returns — and the guaranteed growth you're shown is often on an income base, not your actual account value. Caps and spreads can be lowered after you buy. High commissions fund long surrender periods. This is the product most often mis-sold.
Somewhere between a fixed annuity and the market — usually much closer to the fixed side once caps and spreads are applied. The advertised index is not what you earn.
Often no explicit annual fee (the cost is the capped upside), but optional income/death riders commonly add ~1%/year. Sales commissions are high — frequently 4–7% — which funds long surrender schedules.
Low. Surrender periods commonly run 7–10 years or longer, with steep early-exit charges.
Tax-deferred growth; gains taxed as ordinary income on withdrawal; 10% penalty on gains before 59½.
Educational explainer, not individualized financial advice. Figures are typical industry ranges as of 2026 and vary by insurer, product, and state. Sources: SEC/FINRA investor bulletins, IRS Pub 575/939, NAIC model regulations, SECURE 2.0 Act. We’re independent and don’t sell annuities.