Annuities 101, part 3: what is a registered index-linked annuity?

april 28, 2023


What is an annuity? Part three of Jackson’s three part series explains what a registered index-linked annuity (RILA) is and how it can help you on your retirement journey.

A RILA is a long-term, tax-deferred vehicle designed for retirement. It is subject to investment risk, its value will fluctuate, and loss of principal is possible. A RILA, which is an insurance contract, allows you to choose how you want to prioritize growth opportunities while managing the amount of loss you may assume. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met.

 

Let's talk about Registered Index-linked Annuities

An age-old challenge investors face is how to invest and grow retirement assets without losing all their principal. A registered index-linked annuity may help you grow your assets, protect your principal, and invest your way.

A registered index-linked annuity allows you to customize how you can seek growth opportunities for retirement.  You can choose from a variety of well-known passively managed indices, to track the performance during the contract period.  While the annuity's contract value may still be subject to loss of principal, it does provide growth opportunities up to a stated cap or growth rate.

 

Ask your financial professional about growing your assets.

Growth investments are essential to a balanced retirement portfolio — yet selecting a diversified pool of equity investments can be challenging. That’s why some investors choose products that offer built-in diversification* benefits and simplicity by tracking the performance of an equity index.

 

Ask your financial professional about protecting your principal.

A RILA can help you manage investment risk by allowing you to determine the level of protection you may want to help cover you during market downturns.

You can select buffer protection, which helps you weather smaller bumps in the road by protecting your investment up to a specified market loss. Or you can specify a maximum loss limit with floor protection against catastrophic market events.

 

Ask your financial professional about investing your way.

Registered index-linked annuities allow you to select an index option period and with each term you can choose a crediting method and protection option.  When your term expires, you are able to reallocate those dollars to another term, index, protection option, and crediting method without unwanted tax consequences. This allows for complete flexibility and the opportunity to adapt based on your needs. 

Contact your financial professional today to help determine if a registered index-linked annuity is appropriate for your retirement plan.

*Diversification does not assure a profit or protect against loss in a declining market.

Investors are not buying shares of any stock or index and cannot invest directly in an index.

Owners could see a substantial loss during an index period if the index declines more than the level of downside protection. If an owner does see a substantial loss during an index period, the owner may not be able to participate fully in a subsequent market recovery due to the capped upside potential in subsequent index periods

Before investing, investors should carefully consider the investment objectives, risks, charges, and expenses of the registered index-linked annuity. The current contract prospectus provides this and other important information. Please contact your financial professional or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.

Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. You should rely on your own independent advisors as to any tax, accounting, or legal statements made herein.

Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased, or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company.

The latest maturity date or income date allowed under an annuity contract is age 95, which is the required age to annuitize or take a lump sum. Please see the prospectus for important information regarding the annuitization of a variable annuity contract.

Registered Index-linked Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and distributed by Jackson National Life Distributors LLC, member FINRA. May not be available in all states and state variations may apply. These products have limitations and restrictions, including withdrawal charges or a market value adjustment, and an Interim Value calculation. Jackson issues other annuities with similar features, benefits, limitations, and charges. Discuss them with your financial professional or contact Jackson for more information.

Jackson® is the marketing name for Jackson Financial Inc. and Jackson National Life Insurance Company®. Jackson National Life Distributors LLC, member FINRA.