An annuity floor is the minimum interest rate that an indexed annuity will credit in a given period. Most indexed annuities have a 0% floor — meaning you cannot lose principal even if the index declines. Some annuities have a positive floor (e.g., 1% or 2%), guaranteeing a minimum positive return.
Key Points
- Floor: minimum interest rate credited regardless of index performance
- Most indexed annuities: 0% floor — cannot lose principal
- Some annuities: positive floor (1-2%) guaranteeing minimum positive return
- 0% floor: principal protection
- An independent agent can compare floor rates across indexed annuity carriers