Annuity floor rate is the minimum interest rate or credited return that an annuity contract guarantees, regardless of market performance. In fixed indexed annuities, the floor rate on index strategies is often 0 percent, meaning the account will not lose value due to negative index returns, though fees may still apply. Some fixed annuities or fixed accounts within indexed products may offer a positive guaranteed minimum rate, such as 1 percent, over specific periods. The floor rate is a key component of an annuityTMs downside protection, reassuring clients that market declines will not directly reduce their principal, subject to contract guarantees and insurer solvency.

Advisors highlight annuity floor rates when explaining how fixed indexed annuities differ from direct market investments. They emphasize that while upside is limited by caps or participation rates, the floor protects against negative index years. In risk discussions, the floor rate helps clients understand the tradeoff between growth potential and principal stability. Advisors also examine whether fixed accounts offer higher floors that might be attractive for conservative allocations. Understanding annuity floor rates allows advisors to position these products as tools for risk-averse clients who want some market-linked opportunity without accepting full downside exposure.