Indexed And Variable Annuities: Do You Know The Difference?

With so many options in retirement, it can often be difficult to make educated guesses based on your circumstances.

That’s where the pros here at Secure Retirement Strategies love to help out.

Find out from Lou Aarons, managing partner at the firm, how indexed annuities differ from variable annuities in this installment of our video series, “SRS Shorts”.


Hi, my name is Lou Aarons and I am one of the partners at Secure Retirement Strategies. I’d like to talk to you today about the difference between a variable annuity and an index annuity. We get that question all of the time.

Variable annuities are simply mutual funds that are wrapped in an annuity shell. You are actually invested in the mutual funds, the insurance company, quite frankly, can only make money by charging you fees. And you have some of the benefits of an annuity.

In an indexed annuity, you are actually participating in the performance of an index without actually being invested in that index.

What that means is you can participate in the upside of the index and the insurance company can guarantee you that if the index is negative, you don’t participate.

In other words, the worst you can possibly do is zero for the year.

That’s the fundamental difference between an index annuity and a variable annuity. We urge you to understand what you have and if you stay tuned for our next episode, we’re gonna talk about how you earn interest in one of those index annuities, where you don’t lose any money.