Fixed annuity: the insurer invests your money in its conservative general account and credits interest, with a guaranteed minimum rate written into the contract. Payouts during annuitization are fixed. Strength: stability and guarantees. Weakness: inflation slowly erodes purchasing power.

Indexed (equity indexed) annuity: still a fixed annuity under the CDI definition, but the interest credited is linked to a market index such as the S&P 500. You do not own the index; the insurer uses a formula to decide how much of the index gain you receive, for example: - a cap (maximum credited rate), - a participation rate (a percentage of the index gain), or - a spread or margin (a percentage subtracted from the index gain). In a down year, the credited interest is typically floored (often at zero), so you do not lose principal to the market, although surrender charges can still apply.

Rule of thumb for the exam: indexed annuities aim for more upside than a traditional fixed annuity with less risk than a variable annuity. A variable annuity invests in separate-account subaccounts, is a security, and requires FINRA registration to sell.