Annual reset is a common FIA feature. At the end of each contract year, your annuity’s index values are automatically reset. This year’s ending value becomes next year’s starting value and any interest credited to your contract is locked in and cannot be lost due to index volatility.
The hypothetical illustration below shows an example of how annual reset works. As you can see, when the market index (dashed line) drops, the FIA contract value (dark line) holds steady. The following year shows a positive change in the market index. The index does not have to make up previous losses in order for the annuity to earn additional interest. The annuity can earn interest in any year in which a positive market index change takes place, thanks to annual reset.