Indexed annuities are a type of financial product that combines features of both fixed and variable annuities. They are designed to provide individuals with a way to save for retirement while also offering the potential for growth based on the performance of a specific market index, such as the S&P 500.

In an indexed annuity, the insurance company guarantees a minimum rate of return, often referred to as the "floor." This means that even if the market index performs poorly, the annuity holder will still receive a minimum level of interest on their investment. However, if the market index performs well, the annuity holder has the opportunity to earn additional interest, often referred to as the "cap" or "participation rate."

Indexed annuities also typically offer a variety of features and options, such as the ability to choose between different index strategies, like a point-to-point or monthly averaging method. These strategies determine how the interest is calculated and credited to the annuity.

One important thing to note is that indexed annuities are considered long-term investments and are typically subject to surrender charges if the annuity holder withdraws their funds before a certain period of time, often referred to as the surrender period. It's important for individuals considering indexed annuities to carefully review the terms and conditions of the annuity contract before making a decision.

Overall, indexed annuities can be a suitable option for individuals looking for a balance between potential growth and downside protection. However, it's always recommended to consult with a financial advisor or professional to determine if an indexed annuity is the right choice for your specific financial goals and circumstances.