Are Fixed Indexed Annuities a third type of annuity?

No—clearly they guarantee principal and returns that have been previously credited and the client is never at risk of loss to market forces, thus they are fixed annuities.

The use of a measuring stick for determining an interest credit that is outside of the insurer’s control is merely an evolution (as opposed to revolution) from the traditional methods of determining interest. It does not turn a fixed product into a security.

At no time is the client’s money invested in stocks, bonds or any other market-risk vehicle.

These are general account products with the carrier being fully liable for the interest as determined according to a pre-determined and stated-in-advance formula. Should the company have failed to hedge properly to cover the upside potential, they are still liable to pay the interest as determined by the formula.

At all times, the client is entitled to a positive minimum return as determined by state insurance regulations. Except through the application of surrender charges, the client cannot lose money. And there are many ways to avoid surrender charges.