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Principal Protection

Utilizing insurance to protect principal can provide meaningful benefits to a client's portfolio, as well as to their peace of mind. DPL’s offering of Commission-Free solutions can provide hedging strategies, fixed returns or complete downside protection.

Page Contents
The benefits of Commission-Free fixed index annuities for principal protection
Sequence of Returns Risk Mitigation

Fixed index annuities can be a powerful tool for principal protection, making them attractive for clients nearing or in retirement.

100% Downside Protection

A Commission-Free FIA can give clients’ assets complete downside protection with non-correlated exposure to the market.

Fixed Income Alternative

Research by Roger Ibbotson found fixed index annuities outperformed bonds over time by about 10%.

De-risking Option

Fixed index annuities should be considered as an alternative to bonds to de-risk portfolios from equities as clients near retirement.

Principal Protection Products

Type Summary
Registered Index Linked Annuity

Registered Index Linked Annuities (also known as Structured Variable Annuities or Buffer Annuities) are tax-deferred insurance vehicles that provide upside potential with a defined degree of downside protection. The investor assumes the portion of the market risk that is in excess of the "buffer" or the initial losses before reaching the...

Solves for Principal Protection, Retirement Income
Fixed Index Annuity

Fixed index annuities are tax-deferred insurance products that provide market upside, while protecting principal from market losses. Assets are allocated into indices that are designed to replicate market performance. These fixed index annuity indices are typically accompanied with cap rates, spreads, or participation rates.

Solves for Retirement Income, Principal Protection, Annuity Rescue+
Multi-Year Guaranteed Annuity

Multi-year guaranteed annuities (MYGAs) offer a tax-deferred guaranteed rate of return for the duration of the product. These simple, short-duration annuities are often used by advisors for fixed income allocations.

Solves for Retirement Income, Principal Protection, Tax Deferral
Fixed Annuity

Fixed annuities are simplified products, offering a tax-deferred guaranteed fixed rate of return for a specified period.

Solves for Retirement Income, Principal Protection, Tax Deferral
How DPL helps RIAs address clients’ two biggest concerns

Sam Johnson explains how DPL can help advisors address two of their clients' biggest concerns: market volatility and outliving their money.


Apr 07, 2020
DPL Founder and CEO, David Lau, and David M. Blanchett, Ph.D., CFA, CFP®, head of...


Oct 25, 2018
Think Advisor Time for RIAs to Rethink Insurance At a recent conference of financial planners...


Jan 21, 2021
Get a review of 2020, market predictions for 2021, and how our members can stay...


Apr 23, 2020
DPL Financial Partners Founder & CEO David Lau and leaders from Pacific Life’s RIA Strategy...

Case Study

Jan 24, 2023
Tim Brown of 360 Family Office discovered the power fee-based fixed index annuities as an...


Feb 03, 2020
When funding a retirement spending goal, there are 3 key ways to do so successfully...


Jan 28, 2020
Wade Pfau, Professor of Retirement Income at The American College and DPL Founder and CEO...


Jun 24, 2020
With historically low interest rates and ongoing market volatility, now is the time to look...


Mar 28, 2019
David Lau, DPL Founder and CEO, and Joe Wittrock, Senior Vice President and Chief Investment...

Why do clients need principal protection?

The reasons clients need principal protection can be both financial and psychological. Principal protection is a very attractive feature for conservative clients. Some annuities offer market exposure (fixed index and buffer) while providing downside protection, giving advisors a means of increasing market exposure for these clients.

Principal protection is also extremely important for retirees and near-retirees. Market performance or sequence of returns risk is at its peak in the years just before and after retirement and can have a very significant impact of retirement income. Protecting from loss of principal is also a top concern for many retirees to ensure their peace of mind.

What is a buffer annuity?

A buffer annuity is a relatively new product type designed after a structured note. A buffer provides index investing options similar to a fixed index (FIA), but generally with more investing options. Unlike an FIA where principal is completely protected, buffer annuities offer limited downside protection which can either be structured to have the carrier absorb “first loss” or “tail risk”. Since downside protection is more limited than with FIAs, buffer annuities generally provide more upside potential in the indices.

What annuity types provide principal protection?

Simply by virtue of their structure these annuities provide principal protection: fixed (FA), multi-year guarantee (MYGA), fixed index (FIA), single premium immediate (SPIA), buffer and deferred income (DIA). Variable annuities can also offer optional principal protection features.

A fixed index annuity (FIA) provides principal protection, how do I determine the product cost?

Many FIAs have no explicit product cost. They are “spread” products like bonds or CDs. As such they should be evaluated in the same fashion, based on yield potential and payout rates. While FIAs generally have no product cost for the core product, income riders will have additional fees.


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under California License #0M42434.

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