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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 indexed annuities for principal protection
Sequence of Returns Risk Mitigation

Fixed indexed 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 indexed annuities outperformed bonds over time by about 10%.

De-risking Option

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

Principal Protection Products

Annuities are perhaps the only way to mitigate longevity risk, but they also are a more efficient means of generating retirement income. Annuities can quickly outperform fixed income in generating retirement income, and provide payouts long after fixed income portfolios would be depleted.

Type Summary
Structured Variable Annuity

Structured Variable Annuities (SVAs) are tax-deferred insurance vehicles that provide a defined degree of upside potential with a defined degree of downside protection from potential downturns in the market. 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 Indexed Annuity

Fixed indexed 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 indices are typically accompanied with cap rates, spreads, or participation rates.

Solves for Retirement Income, Principal Protection, Annuity Rescue+
Fixed Annuity

Fixed annuities are tax-deferred insurance vehicles that provide a guaranteed minimum fixed rate of return that is typically reset on an annual basis. Some types of fixed annuities, known as multi-year guaranteed annuities (MYGAs), can offer a fixed rate of return for the duration of the product. Fixed annuities provide tax...

Solves for Retirement Income, Principal Protection, Tax Deferral
Single Premium Immediate Annuity

A single premium immediate annuity is a contract funded with a single lump-sum payment (premium) in exchange for guaranteed income payments. Designed to supplement retirement income, a SPIA insures the purchaser against outliving their money or exhausting it within a certain timeframe. A SPIA can begin paying income immediately, bypassing...

Solves for Retirement Income, Principal Protection
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.

How DPL helps RIAs address clients’ two biggest concerns

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

Insights and Resources


Oct 01, 2016

The Journal recently talked with Finke to learn about his current research projects, his views...


Feb 03, 2020

Wade Pfau PhD, CFA, RICP and DPL Founder and CEO, David Lau dig into reasons why...


Apr 07, 2020

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


Feb 24, 2020
Learn how the “Setting Every Community Up for Retirement Enhancement (SECURE) Act” will impact registered...


Feb 07, 2019

Imagine if you had to replicate—at an individual client level—every mutual fund you purchased by...


Feb 07, 2019

DPL’s David Lau talks about the reasons why DPL believes that annuities are an important...

Nicole Benz


Nov 30, 2018

DPL Consultant Nicole Benz discusses variable universal life insurance and how a commission-free solution helped...

White Paper

This balance of spending today and the risk of outliving assets presents a challenge when...



Jan 30, 2019

It happens all the time…clients walk in and, through a fact-finding exercise or just in...

Common Questions

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.

Have more questions about principal protection?


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DPL Financial Partners does business in the state of California as DPL Insurance Solutions
under California License #0M42434.

Securities offered through The Leaders Group, Inc. Member FINRA / SIPC
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