What's the difference between fixed, variable, and indexed annuities?

These are three very different products. A fixed annuity pays a guaranteed interest rate for a set term, much like a CD from an insurer – simple and predictable. A variable annuity invests your money in market subaccounts, so your value and income can rise or fall; it often carries high fees (frequently 2%–3% all-in) and optional riders that add cost. An indexed annuity (sometimes called a fixed indexed annuity) credits interest linked to a market index like the S&P 500, but caps your upside and floors your downside at zero – the marketing sounds great, yet caps, participation rates, and surrender charges often make real returns modest. As a rule, the more complex the annuity, the more carefully you should read the contract and fee disclosures before committing.