What Is a RILA?
A Registered Index-Linked Annuity (RILA)—also called a buffered annuity or structured annuity—offers market-linked growth potential with built-in downside protection. Think of it as the middle ground between a fixed index annuity (100% protection, capped upside) and a variable annuity (full market exposure, full downside risk).
Key Features:
- Partial downside protection through buffers (10%, 15%, 20%) or floors
- Higher growth potential than traditional fixed annuities
- Customizable risk/return profiles with multiple crediting strategies
- Tax-deferred growth like other annuities
- No explicit fees on most crediting options (priced into caps/participation rates)
RILA Basics Infographic
How RILAs Work: Protection + Participation
Buffer Protection
- Absorbs the first X% of losses
- Example: With a 10% buffer, if the index drops 15%, you lose 5%
- If the index drops 8%, you lose nothing
- Better for moderate corrections
Floor Protection
- Limits your maximum loss to X%
- Example: With a -10% floor, you never lose more than 10%
- Whether the market drops 15% or 35%, you lose only 10%
- Better for severe bear markets
Growth Strategies
- Point-to-Point with Cap: Participate up to a maximum (e.g., 12% cap). Simple and predictable.
- Participation Rate: Receive a percentage of index gains (e.g., 140% of S&P 500). No cap, but participation may be limited.
- Trigger/Digital: All-or-nothing: Hit the threshold, get the full credit. Miss it by 0.01%, get nothing.
- Step-Up: Lock in gains periodically (monthly/quarterly). Smooths volatility.
RILA vs. Other Annuities Comparison
| Feature | RILA | Fixed Index Annuity | Variable Annuity | MYGA |
|---|---|---|---|---|
| Downside Protection | Partial (Buffer/Floor) | 100% | None | 100% |
| Growth Potential | High | Moderate | Highest | Fixed Rate |
| Fees | Built into rates | Built into rates | 1-3%+ annually | None |
| Complexity | Moderate | Moderate | High | Simple |
| Best For | Growth with protection | Conservative growth | Aggressive growth | Predictability |
Current RILA Rates - Q1 2025
| Carrier | Product | 1-Year S&P Cap | Participation Rate | Buffer Options | AM Best Rating |
|---|---|---|---|---|---|
| Brighthouse | Shield Level Selector | 13.5% | 145% | 10%, 15%, 20% | A |
| Equitable | Structured Capital Strategies | 12.75% | 155% | 10%, 15%, 20% | A |
| Lincoln | Level Advantage | 12.25% | 140% | 10%, 15% | A+ |
| Allianz | Index Advantage | 13.0% | 150% | 10%, 15%, 20% | A+ |
| Prudential | FlexGuard | 12.5% | 145% | 10%, 15%, 25% | A+ |
*Rates as of January 21, 2025. Subject to change. Actual rates depend on term length, index selection, and protection level. Get personalized current rates.
Who Should Consider a RILA?
✓ Ideal Candidates:
- Pre-retirees (50-65) with 5-10 year time horizons
- Conservative investors wanting more growth than bonds/CDs
- Risk-aware accumulators who can accept some downside for higher upside
- Tax-conscious savers in higher brackets seeking deferral
✗ Not Ideal For:
- Those needing 100% principal protection
- Income-focused retirees (unless adding income riders)
- Short-term money (surrender charges apply)
- Anyone uncomfortable with market-linked returns
RILA Planning Strategies
1. The Ladder Approach
Spread money across different:
- Term lengths (1, 3, 6 years)
- Protection levels (mix buffers/floors)
- Indices (S&P 500, Russell 2000, MSCI EAFE)
2. Core-Satellite Strategy
- Core: 70% in moderate buffer (10-15%) with S&P 500
- Satellite: 30% in higher-risk/higher-return options
3. Pre-Retirement Accumulation
- Years 1-5: Higher growth focus (lower buffers)
- Years 6-10: Shift to higher protection (20% buffers/floors)
- Year 10+: Consider adding income riders or annuitizing
4. Tax-Efficient Bond Alternative
Replace taxable bonds with RILA floors for:
- Similar downside protection
- Higher growth potential
- Tax deferral benefits
Use our CD vs Annuity Calculator to compare after-tax returns.
Important Considerations
Surrender Charges
- Typically 7-10 years declining
- Free withdrawal: Usually 10% annually
- Some offer return of premium death benefits
Tax Treatment
- Gains grow tax-deferred
- Withdrawals before 59½ may incur 10% penalty
- Non-qualified: LIFO taxation
- Consider 1035 exchanges from existing annuities
Learn more: Are Annuities Taxable?
Regulatory Protection
- RILAs are SEC-registered securities
- Sold with prospectus (not just marketing materials)
- Require securities license to sell
- State guaranty funds typically don't apply
Common RILA Mistakes to Avoid
- Chasing highest caps without checking participation rates
- Ignoring renewal rate history - check carrier financial ratings
- Over-allocating to exotic indices
- Misunderstanding buffer vs. floor in severe downturns
- Not diversifying across segments and strategies
Frequently Asked Questions
RILAs offer downside protection (buffers/floors) and don't charge explicit annual fees. Variable annuities offer unlimited upside but full downside risk and charge 1-3% in annual fees.
Yes, but losses are limited by your chosen buffer or floor. With a 10% buffer, you only lose money if the index drops more than 10%.
Surrender charges apply (typically 7-10 years). Most RILAs allow 10% free withdrawals annually. After the surrender period, access is penalty-free.
They're more complex than MYGAs but simpler than variable annuities. The key is understanding your protection level and growth strategy for each segment.
No. RILAs work best as part of a diversified strategy, typically 20-40% of conservative growth allocations. Use our Journey Guide to model the right allocation.
Ready to Compare RILA Options?
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Get Your RILA Comparison Call 855-583-1104Next Steps
- Determine your risk tolerance - How much downside can you accept for higher growth?
- Set your time horizon - RILAs work best with 5+ year commitments
- Compare current rates - Get a personalized RILA comparison
- Model the impact - Use Journey Guide to see how a RILA fits your plan
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Disclosure: Registered Index-Linked Annuities are complex products with investment risk. This page provides educational information only. Consult with a licensed professional to determine suitability for your specific situation. My Annuity Store, Inc. does not provide tax or legal advice. We do not represent ourselves as fiduciaries.
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