Long-form
Can You Make Money with a Spread Fee? Annuities Explained 2026SummaryIn this 1:10 Annuities Explained video, Jeffrey Scott McLeod, LUTC, covers “Can You Make Money with a Spread Fee? Annuities Explained 2026.” Can you make money with a spread margin or administrative fee inside of the fixed index annuity? Let's say on an annual point-to-point basis, the index begins here and is down most of the year, but shoot straight up over to the right hand side of the ledger on your anniversary date and begins ends above where you begin. Well, you might have a spread of 2% of the gain, not of your principal. So two from 10 equals eight interest credited to your annuity. That's called a margin spread or administrative fee. They just take your beginning date and your ending date point to point and if it's up by 10, you subtract the spread and the rest is yours. That's three ways to make interest in a fixed index annuity. A participation rate, a cap, or a margin, spread or administrative fee of the interest gain only, not of your principal Insurance education only—not securities advice. Key takeaways
From the NAIC Buyer’s GuideIndex interest formulas may use features such as participation rates, cap rates, and spread/margin rates, so credited interest may reflect only part of an index change. If the index goes down over the period, zero interest is added for that feature and annuity value will not go down from that index change as long as you do not withdraw the money. Fixed indexed annuities are a type of fixed annuity that earn interest based on changes in a market index; the interest rate is guaranteed never to be less than zero, even if the market goes down. When you buy an indexed annuity, you are not investing directly in the market or the index. Common indexing methods described in NAIC materials include annual reset (ratcheting), high-water mark, and point-to-point. The indexing method is the approach used to measure the amount of change, if any, in the index. Sources: NAIC Buyer’s Guide for Deferred Annuities (2022); NAIC Buyer’s Guide for Fixed Deferred Annuities — Appendix for Equity-Indexed Annuities (2007 materials). The guides do not endorse any company or policy. State insurance departments: www.naic.org. Questions about fixed index annuities? Call or text 501-658-9882 · Book a time on the calendar Insurance-only disclaimer Jeffrey Scott McLeod, LUTC, is a licensed insurance producer. Content on this page is educational and discusses insurance products only—not securities, brokerage, or investment advisory services. Texas license 901162. Arkansas / National Producer Number 558629. Product availability, rates, and features vary by state and insurer. Read the NAIC Buyer’s Guide and the insurance contract before you buy. More videos |
Jeffrey Scott McLeod, LUTC — Licensed insurance producer. Texas license 901162. Arkansas / National Producer Number 558629. Insurance products only; not securities or investment advisory services.
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