# The Differences Between Fixed and Indexed Annuities

Also known as a fixed-index annuity, index annuities are essentially a hybrid of a fixed and variable annuity. The reason being is that index annuities combine the features of both of these types of annuities.

## Differences Between Fixed and Indexed Annuities

The main differences between fixed and indexed annuities are as follows;

• With a fixed annuity, interest is based on the date of contact. With index annuities, interest is determined by the performance of an index, such as the S&P 500. Just note that indexed annuities will never drop below a certain level.
• Generally, fixed annuities have lower fees, while indexed annuities higher fees.
• Overall, fixed annuities are predictable and simple to understand. Indexed annuities can be complicated and slightly riskier.