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Unveiling the Features of Registered Index-Linked Annuities (RILAs)

Unveiling the Features of Registered Index-Linked Annuities (RILAs)

| July 17, 2023

Retirement planning requires careful consideration to ensure financial security in our golden years.  One popular option that has gained prominence in recent times is the Registered Index-Linked Annuity (RILA).  Designed to offer a balance between market participation and protection against downside risks, RILAs have captured the attention of many investors seeking reliable and flexible retirement income stream.  In this blog post, we’ll delve into what a Registered Index-Linked Annuity is and explore the features they offers.

A RILA is sometimes also known as an Indexed Annuity or an Equity-Indexed Annuity and is a financial product that combines features of both fixed and variable annuities.  These annuities offer the opportunity to participate in the potential gains of a market index, while also providing a measure of protection against market downturns.

RILAs function by linking their performance to a specific market index, such as the S&P 500 or the Dow Jones Industrial Average (DJIA).  Unlike traditional variable annuities and the sub accounts they directly invest in, RILAs use a more indirect approach.  Instead of investing directly in the market, RILAs use options or derivatives to track the performance of the chosen index. 

Key Features and Benefits:

  1. Principal Protection – One of the primary advantages of RILAs is the protection they offer against market downturns. RILA’s typically include a downside protection feature that can limit market loss.  
  2. Upside Potential – RILAs provide the opportunity to participate in the upside potential of the market index. If the index performs well, you have the chance to earn a return that is linked to the growth, often subject to a cap or participation rate.
  3. Guaranteed Income – Another appealing aspect of RILAs is the option to convert your accumulated value into a guaranteed income stream during retirement. This can provide peace of mind by ensuring a steady flow of income throughout your retirement years.
  4. Tax-Deferred Growth – Similar to other annuity products, RILAs offer tax-deferred growth. This means that you won’t pay taxes on the earnings until you withdraw them, allowing your investment to potentially grow faster over time.
  5. Diverse Investment Options – RILAs often offer a range of index options to choose from, allowing investors to tailor their investments to their risk tolerance and financial goals. This flexibility enables individuals to align their investments with their specific preferences and objectives.

Considerations and Potential Drawbacks

While RILAs offer attractive benefits, it’s essential to consider a few potential drawbacks before deciding if they’re the right fit for your retirement strategy.  Some factors to keep in mind include:

  1. Caps and Participation Rates – RILAs often come with limitations on the maximum return you can earn. These may include caps or participation rates, which can impact your overall potential returns. It is always important to review the current rates and caps that are being offered as they change frequently.
  2. Complexities and Fees – RILAs can be complex financial products with various fees and features. It’s crucial to fully understand the terms and conditions, surrender charges, and any other associated costs before committing to a particular RILA strategy.  Be sure to discuss the ins and outs with your trusted financial advisor.
  3. Limited Liquidity – RILAs generally have limited liquidity options, with surrender charges or penalties for early withdrawals. This means that you may have limited access to your invested funds until the annuity’s surrender period ends.  There is also usually a free withdrawal rate that is offered within the contract, which is essentially a percentage of the contract value that is eligible for withdraw each contract year without surrender penalty, but could vary from contract to contract. 

Conclusion –

Registered Index-Linked Annuities (RILAs) offer a unique combination of market participation and downside protection (“Buffer”), making them an attractive option for retirement planning.  By providing the potential for growth linked to a market index while preserving principal investment, RILAs offer investors a balance between risk and reward.  However, it’s crucial to carefully consider the associated features, costs, and potential limitations before deciding if RILAs aligns with your financial goals and risk tolerance.  Consulting with a financial advisor can provide valuable insights and help you determine if a RILA is the right choice for your retirement portfolio.

If you’re unsure who to speak with about whether or not a RILA makes sense for your financial plan feel free to book and complimentary consultation here!




Registered index-linked annuities (RILAs) are sold by prospectus only.  Before purchasing an annuity, you should consider the features of the contract, applicable investment options, index strategies, and investment objectives as well as the risks, charges, and expenses associated with the annuity and its investment options.  The prospectus contains this and other information, which should be read carefully before investing.  To request a prospectus contact your investment professional.

All annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. 

Annuities are long-term investment designed for retirement purposes.  With a RILA, there is a risk of loss of principal if negative index returns exceed the selected protection level.

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.

This material is intended for general use. By providing this content Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity.


Michael R. Acosta and Thomas J Dumas are Financial Advisors and Registered Representatives of Park Avenue Securities LLC (PAS). OSJ: 6115 Park South Drive, Suite 200, Charlotte, NC 28210. Securities products and advisory services offered through PAS, member FINRA, SIPC.  Financial Representatives of The Guardian Life Insurance Company of America®(Guardian), New York, NY. Park Avenue Securities is a wholly owned subsidiary of Guardian. Consolidated Planning, Inc. is not an affiliate or subsidiary of PAS or Guardian. Michael R. Acostas’ CA insurance license # 0M50974. Thomas J Dumas’ CA insurance license #OM90694. Guardian and PAS do not offer student loans to finance education nor do they offer legal to tax advice.  2023-156704 Exp. 6/25