An index annuity is considered to be in a special class of annuities that will give you a return on your contributions that will be based on an equity based index. An index annuity can be purchased from your insurance company and will usually have terms and conditions that are attached with certain payouts depending on what was agreed upon in the original annuity agreement. An index annuity is considered to be a fixed annuity that will earn interest that may be linked to an external reference. An index annuity can offer you a minimum guaranteed interest rate that will be combined with an interest rate that is linked to the current market. An index annuity has a less of a market risk and could have the potential to have better returns than the other traditional annuities that are out in the market. When trying to decide if an index annuity is right for you, you should contact you insurance company that specializes in index annuities to find out what the best options are for your retirement needs.