Fixed indexed annuities, or FIAs, are having a moment. Sales are at an all-time high, driven by market volatility and higher interest rates. FIAs are a type of annuity in which the rate of return is based on the movement in a market index, such as the S&P 500.
Financial professionals selling FIAs typically provide potential buyers a visual representation, or an illustration, of how the annuity might perform under different circumstances.
Unfortunately, instead of providing clarity, illustrations often cause more confusion or mislead prospective buyers. Why? Because model regulations allow insurers to show projected returns using unrealistic assumptions.