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Rising return: Within the past year, one-year caps on FIA strategies have doubled from five percent to 10 percent. While this is still not up to par with their pre-2006 level of 15-plus percent, as past podcast guest, David Blanchett, says, FIAs have “some market upside potential with strong downside protection, as well as tax deferral.”

What are FIAs? As Blanchett says, “The process of creating an FIA is relatively straightforward, where an at-the-money call option is purchased and an out-of-the-money call option is sold so that the total cost of the options was equal to the available options budget.” Although they possess an equity component, FIAs are more bond-like in nature, versus stock-like, meaning bond yields help determine their options budget. As such, “When bond yields are low, the caps on FIAs are going to be relatively low (and vice versa).”

Consider this: If you’re looking to maintain market participation today with a risk-averse approach, FIAs are an option. They help provide principal protection during volatile times and ongoing opportunities for portfolio growth. Additionally, FIAs reap the benefits of tax deferral when purchased in a taxable account, which is an especially important aspect to consider in higher bond yield environments.

My two cents: If you dismissed annuities in the past, think again. They may deserve a second look, given this interest rate environment.