If you’re worried about a market crash, you’re not alone.
Many pre-retirees and retirees ask the same question: Do annuities lose money when the market crashes? And if you already own one, what happens to your contract?
Let’s break this down in plain English—and clear up the confusion once and for all.
Need help choosing the best annuity for your unique situation? Have questions about getting an annuity? If so, it’s best to speak with an annuity specialist. Watch this short video to see how I can help you do this (at no cost to you!)
Tip: See how much an annuity could pay you using our annuity calculator
Do Annuities Go Down When the Market Crashes?
The short answer: it depends on the type of annuity you own.
Not all annuities are built the same, and this is where most people get tripped up.
The key difference
- Stock market investments = ownership in companies
- Most annuities = contracts with insurance companies
That difference matters a lot during market crashes.
Variable Annuities vs Fixed & Fixed Indexed Annuities
Here’s where clarity really helps.
Variable annuities
- Invested in sub-accounts tied directly to the market
- Can lose value when the market crashes
- Behave much like mutual funds inside an annuity wrapper
That’s not what I focus on.
Fixed annuities & Fixed Indexed Annuities (FIAs)
- Not invested in the stock market
- Designed for market protection, guarantees, and peace of mind
- Account value does not go backward due to market losses
These are the annuities I specialize in.
💡 Pro Tip: If your annuity statement shows negative annual returns, you’re likely in a variable annuity—not a fixed or indexed one.
👉 Want help confirming what type of annuity you own? Schedule a consultation here.
What Actually Happened During the 2008 Market Crash?
2008 was brutal.
- Stocks fell hard
- Home values collapsed
- Retirement accounts were cut in half for many people
But here’s the key point:
Fixed & Fixed Indexed Annuities in 2008
- Did not lose a dime
- Account values stayed intact
- Some simply earned zero for the year, not negative returns
That’s because these annuities were never invested in the market to begin with.
How Fixed Indexed Annuities Really Work (Without the Jargon)
This is where most advisors overcomplicate things—so let’s keep it simple.
What you don’t own
- You do not own stocks
- You do not own the S&P 500
What the insurance company does
- Your money sits safely in the annuity contract
- The insurance company uses its own money to buy call options on an index (like the S&P 500)
What happens in a market crash?
- The call options expire worthless
- The insurance company eats the cost
- Your account stays whole
No loss. No backtracking. No panic selling.
This is the cost of protection—and why FIAs don’t give you 100% of market upside.
What About Income Riders During a Market Crash?
If your goal is lifetime income, this is where annuities really shine.
Income rider basics
- Creates a guaranteed income base
- Income grows even if the market is down
- Payments continue for life, even after the account value hits zero
In most cases:
- The account value will decline
- But the income never does
That’s not a bug—it’s the design.
💡 Pro Tip: Income is based on the benefit base, not the account value. That’s why income continues even after the balance runs out.
👉 Want to see how much guaranteed income your savings could produce?
👉 Check the annuity calculators here.
Growth-Only Fixed Indexed Annuities (No Income Rider)
Not everyone wants income right away.
Some people want:
- Market protection
- Long-term growth
- No rider fees
In those cases, a bare-bones fixed indexed annuity can make sense.
What happens in a crash?
- Worst case: zero growth for the year
- Best case: growth when markets recover
- Your principal stays protected
Over long periods, these strategies can still deliver solid returns—without the emotional rollercoaster of the stock market.
Why the Insurance Company Matters More Than the Index
Here’s something most people never hear.
There are thousands of indexed annuity options—and many look great on paper.
The real difference?
- Renewal rate history
- Consistency of participation and cap rates
- Whether the company rewards long-term clients or just sells flashy bonuses
Some companies lure investors in… then slash rates later.
I avoid those.
👉 Want help choosing the right annuity company, not just a shiny illustration? Schedule a call with me here.
Conclusion
If you own the right type of annuity, market crashes don’t derail your plan.
✔ No market losses
✔ No panic selling
✔ Optional guaranteed income for life
✔ Predictability when everything else feels uncertain
That’s why so many retirees use annuities—not to get rich, but to sleep better at night.
Need help with finding the best annuity for your retirement?
Click here to schedule a call with me.
On the call, I can help you:
- Determine what type of annuity is best for you
- Find the highest paying annuities for your unique situation
- Answer any other questions you may have