Registered index-linked annuities – RILA
An increasingly popular annuity that offers the potential for market growth with a level of downside protection.
Last updated February 11, 2026
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Have you been looking into annuities as an option for part of your retirement strategy? If you’re nearing retirement and want to take advantage of growth potential with a level of downside protection not seen in traditional investments, consider a RILA. It’s a type of annuity that may be able to deliver the combination of lower risk and reward potential you’ve been looking for. This article will help you understand:
How RILAs work
The difference between RILAs and other types of annuities
Who should consider a RILA
Potential to grow your investment
Growth that is potentially higher than fixed or fixed-index annuities.
Limit exposure to market risk
A level of protection from market downturns that is based on your comfort level with risk.
Tax advantages
Tax-deferred growth potential for your investment (like other types of deferred annuities)
No explicit fees
With no fees to reduce your contract value, more of your money works for you.
How registered index-linked annuities work
A RILA is a relatively new type of deferred annuity that lets you take advantage of potential tax-deferred growth because your principal is tied to the performance of one or more stock market indices while also limiting losses during a market downturn with a level of protection.
It's important to understand that the principal in your RILA isn't directly invested in the market index you choose; instead, the insurance company tracks how the index performs to help determine the investment gains or losses within your contract. As the annuity owner, you choose from different available "strategies", which basically define the rules for calculating investment performance. There are a few key concepts to look at when considering how investments in your RILA work:
The strategy term
This is the “investment horizon” for your strategy, or amount of time between the start point and end point of a strategy, such as 1, 3, or 6 years. You may see this referred to as a “point-to-point” investment. At the end of your term, your contract value will go up or down based on the index performance and your selected strategy.
The downside protection mechanism
A strategy can have either a buffer or a floor to protect against negative index performance at the end of your strategy term. A buffer protects you from a percentage of the loss. So for example, a -10% buffer means the insurance company absorbs up to 10% of index losses at the end of the term. A floor caps the maximum loss you’re willing to take: a -10% floor means that if the index is down at the end of your term, you absorb the first 10% of any losses, and the insurance company absorbs any losses beyond that.
The upside crediting mechanism
If an index you selected to track has positive performance at the end of your strategy term, it can be limited by a cap rate and/or a participation rate. To illustrate, with a 10% cap rate, you get any positive returns up to 10%, and the insurance company gets the rest. With a participation rate you get a percentage of any positive index performance. For example, if the index has grown by 20% at the end of your strategy and the participation rate is 50%, the return credited to your investment is 10%.
An example of how a RILA protection strategy could work
There are many ways protection strategies can work in a RILA, but generally speaking, the higher the amount of downside protection you opt for, the more limited your upside growth potential will be. It's a risk-and-reward tradeoff in which you set a level beyond which the risk becomes too much, but this means you may also forgo some potential gains. To illustrate, let's look at a simple scenario:
A 1-year strategy term
A -10% protection buffer
A 10% cap rate (and 100% participation rate)
A $100,000 contract value (CV)
What happens if your index is down at the end of your term:
If the index has a mild decline, for example, a 3% fall over your point-to-point term, then the -10% buffer protects you from all losses and your CV remains at $100,000. However, if your index suffers a very substantial decline of 15%, your -10% buffer means you will only lose 5% of your contract value, so at the end of the term your CV is $95,000 (but without any buffer, it would be just $85,000).
What happens if your index is up at the end of your term:
With a 10% cap rate, if the index gains up to 10% over your point-to-point term, all the gain is credited to your contract. So if the index rises 7%, your CV at the end of the term is $107,000. On the other hand, if the index gains 17%, your gains are capped at 10%, and your new CV will be $110,000.
Different strategies and market scenarios yield different results
The above example illustrates how traditional mechanisms might work, but RILA annuities can offer a number of strategy options. For example, Guardian MarketPerform® offers two additional crediting strategies: the Step-Up Trigger Rate Strategy, which credits a fixed rate if the index return is zero or higher, and the Cap with Par & Spread Strategy, which offers higher growth potential by applying a Spread to reduce positive index returns at term-end.*
If you had selected a Guardian MarketPerform annuity with the Step-Up Trigger Rate Strategy with a 9% Trigger Rate, and the index return was 0% or higher, you would be credited the full 9%. That means your contract value would grow from $100,000 to $109,000 — even in a flat market.
Alternately, with the Cap with Participation and Spread Strategy, if the index gained 25%, the cap was 30%, and the spread was 3%, your credited return would be 22%, bringing your contract value to $127,000. If the index return was above the 30% Cap Rate, for example, 55%, the Spread would be subtracted from the Cap, and you’d be credited 27%, resulting in a contract value of $127,000.*
How is a registered index-linked annuity different from other annuities?
A RILA is designed to combine growth potential with a level of investment risk protection. To better understand what that really means, it helps to review the different types available and how annuities work.
An annuity is a contract with a life insurance company to take a sum of money — the principal — and turn it into a series of guaranteed payments, typically to create monthly income in retirement (which is why it's often called an income annuity). The income payments can continue throughout your lifetime or for a period of time you designate, such as 10 or 20 years.
An immediate income annuity is typically funded with a single lump-sum payment, and income payments start within a year.** On the other hand, a deferred annuity acts as a vehicle that lets you invest money over several years and then take income later. As you accumulate funds, your money grows differently in different types of annuities, depending on your appetite for investment risk and potential returns.
A fixed rate annuity provides a guaranteed rate of return on the premiums you contribute, so there’s no investment risk, which makes it very predictable. However, other types of annuities may offer more growth potential, but less certainty.
Unlike a fixed rate annuity, a variable annuity (VA) lets you invest in securities — such as stocks and bonds funds — to take advantage of the highs and lows of the financial markets over time. And, those earnings are tax-deferred until you're ready to start receiving guaranteed income payments. But you must be willing to accept investment risk and volatility. Also, there is no way to guarantee the amount of your eventual income payments, because there's no way to accurately predict market performance: your principal could grow substantially — or in a down market, it could actually lose value.
A fixed index annuity (FIA) offers potential growth tied to a market index (for example, the S&P 500®). However, there's a cap on maximum gains and a minimum guaranteed interest rate. So you can benefit — up to a point – when the market performs well and have protection from losses to your principal in a down market.
How is a RILA different from a variable or fixed index annuity?
Generally speaking, RILAs offer less growth potential but a level of protection from downside risk compared to a traditional variable annuity, and more growth potential but less protection from downside risk than a fixed-index annuity. A RILA also lets you define the maximum amount of losses you're willing to accept by having different levels of protection you can choose for your investment– and the less protection you have around your investment, the greater your potential for upside gains tied to your selected market index.
What are the benefits and risks of having a RILA?
Potential Benefits | Potential Risks |
|---|---|
Market-linked growth potential: RILAs provide the opportunity to earn returns based on the performance of a market index, offering higher growth potential compared to traditional fixed rate annuities. | Relatively limited upside: Returns are typically capped or limited by participation rates, so you may not fully benefit from strong market performance. |
Level of downside protection: Unlike variable annuities, RILAs offer a level of protection against market losses through features like buffers or floors. This can help limit potential losses if the market declines. | Potential for loss: Although RILAs provide a level of downside protection, there is still a risk of loss depending on market performance and your chosen protection strategy. |
Tax-deferred growth: Like other annuities, RILAs offer tax-deferred growth potential, an important consideration for retirement planning. | Complexity: RILAs are complex financial instruments with features that can be difficult to understand. |
Flexibility: RILAs can be tailored to an investor’s risk tolerance because it allows them to choose their level of protection and potential return. | Liquidity constraints: RILAs often have surrender charges for early withdrawals and, like other annuities, can limit access to funds during the contract term. |
| no | Credit risk: Like other annuities, the benefits and guarantees of a RILA are subject to the claims-paying ability of the issuing insurance company. |
Who should consider a RILA?
This type of annuity may be a good choice for you if:
You are comfortable with some degree of risk in exchange for a potentially higher rate of return
You are nearing retirement and wish to place a protection buffer on the degree of market loss to which your stock or equity investments are exposed
You don’t need the money right now and are comfortable with a long-term investment that has time to weather some degree of market risk
You are interested in an investment vehicle that can provide tax-deferred growth, with the understanding that withdrawals will be subject to ordinary income tax
You see the value in having a limit on what you can gain from your investment because there is also a limit on what you can lose.
It's important to remember that a registered index-linked annuity, like any annuity, should be considered as part of your overall retirement strategy, along with Social Security income, 401(k)s, pensions, brokerage accounts, and/or other retirement income sources.
1
Pick a Strategy Term
1-, 3-, or 6-year time frames
Track the performance of an index for 1, 3, or 6 years.
2
Select a level of protection
-10%, -20%, or -30%
Choosing less protection gives you increased upside potential.
3
Select indices to track
4 indices to choose from7
Decide on your investment selection(s) and the percentage of your investment to allocate toward them.
While there are only three main choices to make, there are a large number of possible variables that could affect your investment, so contact a Guardian financial advisor to learn more about registered index-linked annuities work. Or, start by using this digital tool that can help you understand the possible outcomes that Guardian MarketPerform could provide in different market scenarios.
To find a Guardian financial advisor near you, just fill in your zip code and click below.
Talk to a financial advisor about RILAs.
Frequently asked questions about registered index-linked annuities
Sometimes called a buffered annuity, a RILA is a type of deferred annuity in which you can take advantage of potential market growth tied to the performance of an index or indices while limiting losses during a market downturn. It lets you select a strategy that includes caps and buffers to help even out investment spikes and reduce your exposure to volatility.
Any annuity could be a good investment if it meets your investment objectives and retirement needs, which are different for everyone. Depending on your risk level, how close you are to retirement, and how much you have to invest now or in the future, a RILA could be a good way for you to help grow funds before you start taking income — and ultimately help ensure you don't outlive all your retirement savings. RILAs can help you realize higher potential gains than fixed or fixed index annuities while still helping to partially mitigate your risk. The decision to invest in a RILA or other investment vehicle typically comes down to your desire for returns and comfort level with risk. It's also important to note that RILAs can be more complex than other types of annuities, and there may be many types of terms and concepts — like "market value adjustment" and "negative index value" that you should understand before investing. That's why it's a good idea to consult with a financial advisor to help you decide what's right for you.
A fixed index annuity (FIA) offers potential growth tied to a particular stock market index, such as the S&P 500, with a minimum guaranteed interest rate so that even in a down year, you are protected from market losses. The tradeoff? When the market performs well, your potential gains are also limited.
A RILA is also tied to a stock market index or indices, but instead of a guaranteed interest rate, you can set a cap or buffer that defines how much you are willing to lose should the index go down. And while a RILA also caps the amount you can gain if the index goes up the caps tend to be higher than that of a FIA. In other words, with a RILA you take on more investment risk compared to a FIA, but you also get the potential for higher returns.
This product is sold by prospectus only. Please read the prospectus carefully before investing or sending money. The prospectus contains important information regarding this product including, risks, fees and expenses. A prospectus may be obtained by calling 888-Guardian (888-482-7342). To download a prospectus, please visit guardianlife.com.
Guardian MarketPerform®may not be available in all states.
The renewal rates under each Strategy are based on the economic environment at the time renewal rates are declared and may be less favorable than those declared at issue. Renewal rates may be reduced as the contract approaches the end of the surrender charge period.
This material is intended for general public use. By providing this content, The Guardian Life Insurance Company of America, The Guardian Insurance & Annuity Company, Inc., and their affiliates and subsidiaries are not undertaking to provide advice or recommendations for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact a financial representative for guidance and information that is specific to your individual situation.
All investments contain risk and may lose value.
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Guardian MarketPerform®is issued by GIAC, a Delaware corporation, and distributed through Park Avenue Securities LLC (PAS). GIAC and PAS are wholly owned subsidiaries of The Guardian Life Insurance Company of America (Guardian). Guardian, GIAC and PAS are located at 10 Hudson Yards, New York, NY. 10001.
Guardian MarketPerform® products are issued on contract forms 23-RILA, ICC24-RILA, 23-RILA BUFFER, ICC24-RILA BUFFER, 23-RILA FRS, ICC24-RILA FRS, 23-RILA ROPDB, ICC24-RILA ROPDB, 23-RILA WSC, ICC24-RILA WSC, 23-RILA STRATEGY SPEC, ICC24-RILA STRATEGY SPEC (or state equivalent forms). Product availability and features may vary by state.
* Cap with Par & Spread is not available in New York.
** If you choose to defer payments on an income annuity for more than one year, it is called a deferred income annuity.