The U. S. Financial Industry Regulatory Authority, Inc. (FINRA), the successor to the National Association of Securities Dealers, Inc. (NASD), has issued warnings about the dangers of “guaranteed” and “principal-protected” indexed-annuities that offer fixed “income benefits” to “beat the bank."; These investments may be unsuitable, can lose money, and are subject to misleading sales practices.

The FINRA/NASD warns in Notice to Members 5-50 (http://www.finra.org/Industry/Regulation/Notices/2005/P014820):

Indexed-annuities are “complex investments.” Most issuers tell their shareholders (but not the retired annuity investor) that the indexed-annuities contain extremely complex structures called “embedded derivatives.” These embedded derivatives are complex financial instruments that are extremely difficult to value. Investor Warren Buffet calls derivatives “time bombs."
Many indexed-annuities are “not registered under the U.S. Securities Act of 1933” and therefore the investor does not have protections afforded by the U.S. Securities Laws. State insurance regulators do not check the fair values of the so-called “embedded derivatives” for reasonableness.
Sales materials for indexed-annuities can “confuse or mislead investors” because they do not “provide a balanced description of the features and risks.” Beware of these claims:

“What if the market goes down and you would lose nothing? The market goes up-you gain!”

“A Win/Win Investment Vehicle!”

“How Your Retirement Funds Can Have: Security of Principal, Higher Than CD Rates of Interest, Opportunity for Growth (No Losses)”

“If you’re looking for upside potential and no market downside look no further than [name of Indexed-Annuity]. This fixed annuity... enables you to make the most of S&P 500 Index gains. . . .”

“Growth Potential without Market Risk.”

Sales agents do not fully understand the complexities and risks of the indexed-annuity. Most sales agents cannot value the “embedded derivatives” that can cause you to overpay for “guaranteed” “protection” of your retirement savings.

A FINRA/NASD “Investor Alert” http://www.finra.org/investors/protectyourself/investoralerts/annuitiesandinsurance/p010614):

You can “lose money.” “Many insurance companies only guarantee that you'll receive 87.5 percent of the premiums you paid, plus 1 to 3 percent interest. Therefore, if you don't receive any index-linked interest, you could lose money on your investment.”