The indexed variable annuity is aimed at those nearing or already in retirement. Like some structured notes, it offers its holders tax-deferred growth potential by allowing them to participate in an equity index with downside protection against losses, in the form of various floors you can choose. For an additional fee, it also allows holders to switch on a lifetime income stream.
Some observers also expect continued growth in so-called “structured” annuities. These come in different flavors, but generally link returns to a stock index without actually investing in the equity market directly. Like other indexed annuities, they usually feature downside protection, but typically in the form of either floors or buffers (floors set a maximum loss level, such as 5% even if the market is down 10%; buffers set a minimum downside, protecting you against the first 5% decline, say, but not against any losses beyond that). These products also offer a higher-than-average ceiling on gains, depending partly on the annual fee, if any; the greater the fee, the higher the cap.
As for optional riders, look for a greater array of possibilities for enhanced benefits. “There are more offerings for products with income enhancements for chronic illness,” cites Bunich at Financial 1. Such options are “multiplying as we head into 2019,” she says.