As foreign stocks continue to outpace U.S. markets—following a year of remarkable returns in 2025—many investors are looking toward international allocations. However, with greater opportunity often comes a higher perception of risk.
To address this, a specific type of insurance-sold tool is gaining significant traction: the Registered Index-Linked Annuity (RILA). By tying investments to international indexes while offering a built-in "buffer" against losses, RILAs are becoming a popular bridge for those wary of global volatility.
The Rise of the International RILA
While RILAs originally focused almost exclusively on the S&P 500, the landscape has shifted. According to data from
For investors who feel they missed out on the recent 30% jump in international markets, these products offer a way to participate in future growth with a defined safety net.
How the "Buffer" Works
The primary appeal of a RILA is the downside buffer. Unlike traditional investments where you feel every percentage point of a drop, a RILA insurer absorbs a set portion of the loss.
For example, a common structure might include a 10% buffer:
If the index drops 8%, the insurer absorbs the entire loss; your account value remains flat.
If the index drops 12%, the insurer absorbs the first 10%, and you experience only a 2% loss.
In exchange for this protection, your upside is typically capped at a certain percentage, or your return is calculated based on price movement excluding dividends.
Who Should Care?
As we navigate a shifting global economy, certain groups may find these international-pegged tools particularly useful:
Retirement Savers: Those who need international exposure to diversify their portfolio but cannot afford a major drawdown as they approach their "retirement red zone."
Conservative Growth Investors: Individuals who are comfortable capping their maximum potential gain in exchange for a "floor" that prevents a market correction from derailing their long-term plans.
Strategic Planners: Because these products often involve one-year or six-year terms, they allow for a disciplined, "set-it-and-forget-it" approach to international investing.
The Bottom Line
RILAs are complex instruments. The length of the term matters—many advisors prefer six-year terms over one-year terms to smooth out volatility—and surrender penalties apply if you need to access your cash early.
However, as a tool for managing "trepidation about international exposures," they provide a unique way to stay invested in global growth while keeping risk within a defined comfort zone.