Slow down before you buy this complicated investment

As long as interest rates remain low, investors will search for investments that promise safety and better-than-average returns.

This is especially true for retirees, who have been waiting for years for a boost in interest rates in order to earn more on certificates of deposit and money market funds.

That search for yield is highlighting two insurance products that tout attractive returns and principal protection: indexed annuities and indexed universal life insurance.

Yet take a minute before you write a check to your insurer. These contracts aren't the easiest to understand, which makes them ripe for misrepresentation and confusion.

"With indexed annuities and indexed universal life insurance, the marketing pitch is always that you get all of the upside of equities and have guarantees," said Larry J. Rybka, CEO of Valmark Securities, an Akron, Ohio-based broker-dealer. "It's really misleading."

An indexed annuity is an insurance contract. Money that you put into the annuity grows on a tax-deferred basis.

Insurers have sold more than $30 billion of indexed annuities in the first two quarters of 2016, according to data from LIMRA.

With these annuities, the amount you have invested will grow based on the gains of a market index.

Here's where things get complicated: You are not directly invested in the index, so you are not fully exposed to its increases or declines. Insurance companies use derivatives, which are complex financial instruments, to keep your account balance from falling when the index slides.

Increases to your account are subject to limitations that the insurer will impose. These are known as "rate caps," "participation rates" and "spreads." For instance, the index tied to your account might go up by 10 percent, but you'll only capture 5 percent due to these restrictions.

Insurance companies can reset these rates and change the interest crediting formula, which may curtail your return.

Don't forget that money you invest in an annuity is subject to surrender periods that often run five to 10 years, depending on the contract. Some annuities have surrender periods that are 15 years. You can lose a chunk of your principal if you try to cash out within that time.

If you exchange an already existing annuity for a new contract, you'll be subject to a new surrender period.

Even with those limitations, an indexed annuity can be a good fit for some, says Carolyn Johnson, CEO of insurance solutions at Voya.

"Indexed annuities fit really well for customers who don't want to take a lot of risk: They aren't subject to principal loss, but they want some upside," she said.

These contracts also provide income after you've stopped working.

"Adding an indexed annuity to your retirement portfolio makes sense if you have a need for guaranteed income and want to make sure you have your basic expenses covered when you stop working," Tom Burns, chief distribution officer for Allianz Life, wrote in an e-mail.

Perhaps the biggest problem with indexed annuities is how they are marketed: Investors can get the impression that their returns are supposed to be similar to equities.

"There are too many people who sell it as an equity alternative: 'You get the market upside without the downside,'" said Scott Stolz, president of Raymond James Insurance Group. "That simply creates false expectations."

Another area of confusion: living benefits. You pay an additional fee for this feature, which provides you with a growing stream of income that you can tap in the future.

The insurer assigns a dollar value to the living benefit, but be aware that this isn't hard cash that you can take with you right away. Rather, it's a notional value the insurance company will use to calculate how much income you receive.

How much you get in monthly income will vary according to the details of the contract, the account value and when you start taking withdrawals. Those are details you can discuss with your advisor.

In the meantime, don't confuse your living benefit value, which isn't actual cash, and your account value.

"A lot of people feel that the benefit base is what they can access [in cash]; they think they can take that money and walk away," said Andrew Murdoch, president of Somerset Wealth Strategies in Portland, Oregon. "Hands down, the biggest cause of that confusion is the way the living benefit is sold."

Indexed universal life is an insurance contract in which your principal will grow on a tax-deferred basis.

As in the case with indexed annuities, your money isn't invested in the market. Rather, the insurance company will credit you an interest rate that is tied to the performance of an index.

Some policies include features that will cover long-term care needs. Indexed universal life insurance, like other so-called permanent policies, can also be a tool for estate planning and retirement income strategies.

Sales of these contracts were $872 million for 2016 through the second quarter, according to Wink, a firm that analyzes the life insurance and annuity industries.

But beware: Insurance companies and agents have also marketed attractive projections on indexed universal life.

These policy illustrations say that customers can capture as much as 12 percent of an index's performance and demonstrate credited interest rates of up to 7 percent, experts say.

This is dangerous because if an indexed universal life contract does not perform according to the projection, the customer may be on the hook for higher premiums in future years to cover the fees on the policy and keep it in force.

"If you're looking at an illustration that shows [an index gain of] 12 percent every year, it's going to be more volatile than that," Voya's Johnson said. "The customer may think they'll need to put in fewer premiums, and that can cause disappointment for everyone."

State insurance regulators at the National Association of Insurance Commissioners last year released guidelines that insurers can use when illustrating policy performance, placing curbs on index values and crediting rates.

Because there are so many moving parts to an indexed universal life insurance policy, it makes sense to review the policy with an independent third-party or advisor to monitor any changes to the contract's expenses, interest rate and premiums.

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Though both indexed annuities and indexed universal life insurance are attractive amid low rates, they can be difficult to understand. Be ready to ask your agent or advisor plenty of questions.

Here are a few from Stolz:

What does it cost me if I have to get out of the contract early? Don't forget that surrender charges will kick in if you withdraw your cash too soon after purchasing the annuity or life insurance policy.

What are you getting paid on this? Agents and advisors who also sell insurance make commissions on the sale of indexed annuities and life insurance, which can give them an incentive to make certain recommendations. Don't be afraid to ask how much they make if you buy a contract.

How does this policy credit interest every year? If they can't explain how this annuity or insurance contract works, then steer clear.