Using a Fixed Indexed Annuity as a Tax-Advantaged Wealth Builder
What do you do when life insurance is off the table — but you still want tax-advantaged growth and protection from market volatility? For David, a recent health setback closed one door, but it opened another. With the right strategy, he found a way to safeguard his wealth, minimize tax drag, and set the stage for both income and legacy.
Andrew Perez
September 17, 2025
Client profile
Age
56
Occupation
Corporate Executive (recently retired)
Marital Status
Married, one adult child
Net Worth
4M (taxable brokerage accounts, qualified retirement accounts, real estate)
Challenge
David was recently declined for life insurance due to a cardiac condition. He had already maxed out contributions to qualified retirement accounts but still had substantial after-tax money invested in taxable accounts, creating a heavy annual tax drag on his portfolio. He was looking for a way to grow wealth conservatively in a tax-advantaged manner without taking on additional stock market volatility — and with principal protection.
Solution
- Product Type: Fixed Indexed Annuity (FIA)
- Initial Premium: $1,000,000
- Features:
- Principal protection
- 0% floor (no losses during market downturns)
- Index-linked crediting strategy for upside potential
- No required minimum distributions until withdrawals start
Why It Worked
The FIA allowed David to continue tax-deferred compounding on his money, even after maxing out his 401(k) and IRA. Since he could not obtain life insurance, the annuity became his next-best option for growing wealth without annual taxation, while protecting principal against market losses.
Outcome
David appreciates that his account value grows without yearly 1099-DIVs or capital gains tax. In 10 years, he plans to annuitize a portion of the contract to create guaranteed lifetime income to supplement his pension. The rest will remain in deferral for potential legacy planning.