Updated October 2026 by Kevin Edwards, California-licensed annuity agent (License #0D42517).
A registered index-linked annuity (RILA) and a fixed index annuity (FIA) both credit interest based on a market index like the S&P 500. The difference is what happens when the index falls. A fixed index annuity can’t lose value because of an index decline. A RILA can. In exchange for taking some of that risk, a RILA usually offers more upside.
RILAs are the fastest-growing part of the annuity market. LIMRA reported record RILA sales of $23.3 billion in the second quarter of 2026, up 22% from a year earlier, while fixed index annuity sales were $30.7 billion, down 7%. That growth is why more people are comparing the two.
RILA vs. Fixed Index Annuity at a Glance
| Feature | Fixed index annuity (FIA) | Registered index-linked annuity (RILA) |
|---|---|---|
| If the index goes down | 0% floor: you’re credited zero for that period, not a loss | You can lose money, limited by a buffer or a floor |
| Upside | Limited by a cap, participation rate or spread | Also limited, but caps are generally higher than on FIAs |
| Type of product | Insurance product regulated by state insurance departments | Registered security, sold with a prospectus |
| Who can sell it | A licensed insurance agent | A securities-registered representative through a FINRA member broker-dealer, who also holds an insurance license |
| Surrender charges | Yes, usually 5 to 10 years | Yes, usually several years |
| Best suited to | People who can’t afford a loss of principal from the market | Longer time horizons and people who can accept a limited loss for more growth potential |
How a Fixed Index Annuity Protects Your Money
A fixed index annuity tracks an index, but your money isn’t invested in it. Each crediting period, the insurance company credits interest based on the index’s movement, up to a cap or other limit. If the index is down, you’re credited 0%. You don’t lose value because of the market, though surrender charges and, on some contracts, a market value adjustment still apply if you withdraw too much early.
This week’s top S&P 500 caps in California run from about 11% to 12% depending on the surrender period. See every product on our California fixed index annuity rates page, updated weekly, or learn more about how fixed index annuities work.
How a RILA Limits Losses: Buffers and Floors
A RILA doesn’t protect you from every loss. Instead, it limits losses in one of two ways.
Buffer
The insurance company absorbs the first part of an index loss, and you take the rest. With a 10% buffer, a 25% index drop becomes a 15% loss to you. A 40% drop becomes a 30% loss. Small and moderate declines are fully covered; large ones are not.
Floor
You take the first part of an index loss, and the insurance company covers anything beyond it. With a 10% floor, a 12% index drop means you lose 10%, and that 10% is the most you can lose in that period, however far the index falls.
Buffers tend to come with higher caps than floors. Both are set in the contract for each crediting period, and the prospectus explains how they apply, along with any charges.
Which One Fits Better?
A fixed index annuity may fit if:
- You’re retired or close to it and can’t afford a market loss on this money.
- You want the option of a guaranteed lifetime income rider.
- You want growth potential better than a CD or MYGA over time, with no chance of losing value to the market.
A RILA may fit if:
- You have a longer time horizon and other money set aside for emergencies.
- You can accept a limited loss in a bad year for higher caps in good years.
- You’re comparing it with a variable annuity or holding stocks directly, rather than with a fixed annuity.
If principal protection is the reason you’re looking at annuities at all, a RILA works against that goal. In that case, a fixed index annuity or a MYGA is the closer fit.
Where I Fit In
I’m an independent California annuity agent, and this site focuses on fixed annuities, MYGAs and fixed index annuities, the products that don’t put your principal at risk from a market decline. RILAs are securities and must be sold by a securities-registered representative with a prospectus. If you’re weighing a RILA you’ve been offered, I’m happy to show you what a fixed index annuity with similar terms would credit today so you can compare. Request a free comparison or call (877) 854-7396.
Frequently Asked Questions
Can you lose money in a RILA?
Yes. A RILA’s buffer or floor limits losses, but it doesn’t eliminate them. With a buffer, losses beyond the buffer are yours. With a floor, you absorb losses up to the floor level.
Can you lose money in a fixed index annuity?
Not from an index decline. A fixed index annuity has a 0% floor. You can still lose money by surrendering early, through surrender charges and, on some contracts, a market value adjustment.
Why do RILAs have higher caps than fixed index annuities?
Because you take on part of the downside risk. The insurer spends less protecting you from losses, so it can offer more upside.
Is a RILA the same as a variable annuity?
No. Both are registered securities, but a variable annuity invests directly in subaccounts with full market exposure. A RILA credits returns based on an index, with a cap and a buffer or floor that limit both gains and losses.
Are RILAs and fixed index annuities taxed the same way?
Generally, yes. Both grow tax-deferred, and gains are taxed as ordinary income when withdrawn. See how annuities are taxed.
Sources
- LIMRA: U.S. annuity sales set new quarterly record in the second quarter of 2026
- SEC Office of Investor Education and Advocacy: Updated Investor Bulletin, Indexed Annuities
- Advisor Perspectives: RILAs, Buffers Are Still Much Better than Floors (David Blanchett)
- California fixed index annuity rates, Fixed Annuity Expert
Kevin Edwards, Integrity Now Insurance Brokers. California Insurance License #0D42517. Annuities are insurance products, not bank deposits, and are not FDIC insured. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Withdrawals before the end of the surrender period may be subject to surrender charges and market value adjustments; withdrawals of taxable amounts may be subject to ordinary income tax and, if taken before age 59½, a 10% federal tax penalty. This page is for educational purposes and is not tax, legal or investment advice. Product availability and features vary by state.
Registered index-linked annuities are securities and are sold only by prospectus. This page is not an offer of any security. S&P 500® is a registered trademark of Standard & Poor’s Financial Services LLC.