Which type of annuities aim for higher returns through aggressive investments?

Indexed annuities aim for higher returns through aggressive investments by linking their performance to a stock market index, such as the S&P 500. Unlike fixed annuities, which provide guaranteed interest rates with little risk of loss, indexed annuities have the potential for greater returns because they allow policyholders to benefit from a percentage of the increase in the chosen index. This makes indexed annuities appealing to those who seek a balance between safety and potential growth.

The nature of indexed annuities provides a combination of downside protection with minimum guarantees and upside potential linked to market performance, which can lead to higher overall returns compared to more conservative annuity types. This characteristic differentiates indexed annuities from other types, such as fixed annuities, which do not offer the same growth potential, or immediate annuities, which primarily focus on providing a steady income stream right away without a focus on maximizing investment returns. Deferred annuities can offer investment growth as well, but they usually include a wider range of investment options, rather than being directly linked to a specific market index.