Since the global financial crisis of 2008, the development and use of indices has continued to be propelled by an increased interest in passive investing. As a result, continued evolution and an increase in indices available on fixed indexed annuities (FIAs) has created confusion and even some fear of a perceived product complexity.

NAFA’s newest educational series seeks to communicate why in the context of retirement planning, both for saving and income purposes, indices have become a cornerstone of innovative annuity designs and applications. The second installment dives into How to Make an Index, which is much like formulating a recipe for a new dish. This piece outlines four critical steps for an effective index build and launch: 1) concept and research, 2) analysis and testing, 3) drafting the rules and 4) tasting the results.