Current indexed annuity rates show how much potential growth you can earn while protecting your principal from market losses.
Unlike fixed annuities, indexed annuities don’t pay a single guaranteed interest rate. Instead, returns are tied to a market index and limited by features like caps, participation rates, or spreads.
Below, you’ll find how indexed annuity rates work, what today’s rates look like, and how to compare them to fixed annuity rates when deciding which option fits your retirement plan.
Today’s Best Indexed Annuity Rates at a Glance
| Rate Term | Rate | Provider | AM Best Rating |
|---|---|---|---|
| 3 Year | 8.50% | United of Omaha Insurance Company (a Mutual of Omaha company) | A+ |
| 5 Year | 10.75% | Axonic Insurance Services | A- |
| 6 Year | 8.25% | Revol One Financial | B++ |
| 7 Year | 10.75% | Axonic Insurance Services | A- |
| 8 Year | 8.55% | Midland National Life Insurance Company | A+ |
| 9 Year | 10.00% | Nassau Life and Annuity Company | B++ |
| 10 Year | 10.75% | Axonic Insurance Services | A- |
| 12 Year | 7.75% | North American Company for Life and Health Insurance | A+ |
| 14 Year | 10.25% | SILAC Insurance Company | B+ |
| 15 Year | 7.00% | Athene Annuity and Life Company | A+ |
- Fixed indexed annuity cap rates moved higher across most terms.
Caps increased by roughly 0.25%–0.35% on the 3-, 5-, 6-, 7-, 9-, and 14-year terms, signaling improved pricing and stronger growth potential for new buyers. - Top Rate: 10.75% across multiple terms – Axonic Insurance Services
While the single highest cap dipped from 11.00%, a 10.75% cap is now available on the 5-, 7-, and 10-year terms, expanding access to top-tier caps across more contract lengths.
Fixed index annuity cap rates show the maximum return you can earn in a strong market year — not a guaranteed rate. Comparing indexed annuities to fixed annuities can help clarify whether growth potential or guaranteed returns matter more for your goals.
Fixed Index vs Fixed Annuities
| If you care most about… | Fixed Annuity | Fixed Index Annuity |
|---|---|---|
| Guaranteed returns | Yes | No |
| Protection from losses | Yes | Yes |
| Growth potential | Limited | Higher potential |
| Predictability | Very high | Moderate |
| Simplicity | Simple | More complex |
What Is an Indexed Annuity Rate?
An indexed annuity rate describes how interest is credited to your annuity based on the performance of a market index, such as the S&P 500.
Instead of earning the full index return, your growth is calculated using predefined limits. This allows insurers to offer market-linked upside while guaranteeing you won’t lose money due to market declines.
Most indexed annuities use some combination of:
- Cap rates (maximum return)
- Participation rates (percentage of index gains credited)
- Spreads (amount subtracted from gains)
These rates vary by insurer, term length, and index, and can change over time.
Important: Indexed annuity rates reset periodically. The rates available today may differ from those when you apply or when your crediting period begins.
How Indexed Annuity Rates Work
Indexed annuity interest is calculated at the end of a crediting period — commonly one year — using the performance of a chosen index and the contract’s rate structure.
The Three Key Rate Components
Cap Rate
A cap rate sets the maximum interest you can earn in a crediting period.
- If the index gain exceeds the cap, your return is limited.
- If the index gain is below the cap, you earn the full gain (before other limits).
Example: If your cap is 6% and the index rises 8%, your credited interest is 6%.
Participation Rate
A participation rate determines how much of the index gain is credited.
- Expressed as a percentage.
- Higher participation means more upside.
Example: A 90% participation rate on a 10% index gain credits 9%.
Spread (Margin)
A spread subtracts a fixed percentage from the index gain.
- If the remaining gain is positive, you earn interest.
- If not, you earn 0% (not a loss).
Example:
Index gain: 8%
Spread: 3%
Credited interest: 5%
What Happens When the Market Goes Down?
If the index tied to your fixed indexed annuity finishes a crediting period with a loss, you don’t lose money. Instead, your interest for that period is credited at 0%, and your account value stays the same. This protection applies regardless of how far the market falls, even during major downturns.
This is possible because most indexed annuities include a 0% floor and principal protection, meaning market losses aren’t passed on to you. In exchange for this downside protection, your upside is limited through caps, participation rates, or spreads. That trade-off — limited upside for protection against losses — defines fixed indexed annuities and makes them appealing to investors who prioritize stability over maximum growth.
Why Indexed Annuity Rates Change
Indexed annuity rates aren’t guaranteed forever. Insurers can adjust caps, participation rates, or spreads over time in response to broader economic conditions, including interest rate environments, bond yields, hedging costs, and market volatility. These factors affect how much it costs insurers to provide market-linked growth while protecting your principal from losses.
Example: Suppose you buy an indexed annuity with a 6% cap during a period of higher interest rates. If interest rates fall or market volatility increases, the insurer’s hedging costs may rise. At your next rate reset, the insurer might lower the cap to 5% to manage that risk, even though your principal protection remains unchanged. On the other hand, when interest rates rise and hedging becomes cheaper, insurers may increase caps or participation rates.
Some contracts reset rates annually, while others lock them in for longer periods. That’s why comparing indexed annuities isn’t just about today’s rates, but also about how often those rates can change and how the contract is designed over time.
Indexed Annuity Rate Comparison Checklist
When comparing indexed annuities, look beyond the headline numbers and review the full contract design:
- Index used – Is it a well-known market index or a custom/volatility-controlled index?
- Rate limits – Are returns limited by caps, participation rates, spreads, or a combination?
- Rate reset frequency – How often can caps or participation rates change?
- Crediting method – How is index performance measured (annual point-to-point, monthly average, etc.)?
- Downside protection – Does the contract include a 0% floor and principal protection?
- Liquidity rules – What are the surrender period, withdrawal limits, and penalties?
Reminder: A higher cap alone doesn’t guarantee better performance. The best indexed annuity is the one whose structure fits your time horizon, income needs, and tolerance for change.
Are Higher Indexed Annuity Rates Always Better?
Not necessarily.
A contract with a higher cap may have a shorter rate guarantee period, use a less favorable crediting method and include tradeoffs elsewhere in the contract.
The best indexed annuity is the one that aligns with your time horizon, income needs, and risk tolerance — not just the highest advertised rate.
Editor Norah Layne contributed to this article.
