The U.S. Department of Labor headquarters stands in Washington, D.C. The department unveiled new rules earlier this week on the financial industry and retirement-savings advice. PHOTO: BLOOMBERG NEWS

Just days ago, it appeared that new U.S. rules on retirement-savings advice might inadvertently boost sales of an insurance-company product that has drawn criticism for its complexity and high compensation to sellers.

Instead, the final rule issued by the Labor Department on Wednesday toughens standards for advisers recommending these “indexed annuities” to retirement savers.

Buyers of these annuities receive interest income that is tied to the performance of a stock-market index, with a guarantee against losses if the market falls. They are pitched as a way for risk-averse investors to still participate in the stock market.

However, there are typically limits on how much of a big stock-market gain is passed through to annuity holders and other complexities that critics say can lead to misunderstanding among investors. The caps on the returns to investors exist partly so insurers can make enough money on the product to pay sellers commissions that typically average around a mid-single-digit percentage of the invested amount. There are also typically penalties due if an investor withdraws their money early from a contract.

“These annuities are extremely complex, so it’s rare that investors will have a good idea of exactly what they are getting,” said Mercer Bullard, a securities-law professor at the University of Mississippi who has long been a critic of indexed annuities.

However, indexed annuities are appealing to conservative, often older, investors who might otherwise put their savings into bank certificates of deposit or bonds. The annuities often pay higher interest than is available in those products in today’s low-interest rate environment, while they protect the buyer from stock market losses possible in stock mutual funds.

Such products offer “features that people really want for money they can’t afford to lose in retirement,” said Chip Anderson, executive director for the National Association for Fixed Annuities, a trade association.

The new Labor Department rule holds advisers working with retirement savings to a “fiduciary” standard, meaning an adviser must work in the best interest of a client and generally avoid conflicts, which can include sales-based compensation. To continue to earn commissions, many advisers will need to have clients sign a “best-interest contract” that includes detailed disclosure of the adviser’s compensation and obligations to the client.

That new best-interest-contract requirement is expected to crimp sales of another type of annuity that has been sold by many advisers—variable annuities, in which money isinvested on a tax-deferred basis in mutual-fund-like accounts.

By contrast, “fixed” annuities—on which the insurer pays interest—have generally had a long-standing exemption from fiduciary requirements.  Observers had anticipated that exemption would continue to apply to the indexed annuities under the new Labor Department rule—and they suggested that would lead some annuity sellers to switch their focus from variable to indexed annuities.

Instead, materials distributed by the White House on Tuesday indicated that indexed annuities would no longer be exempt under the same standards as other types of fixed annuities. Rather, like variable annuities, advisers who want to sell indexed annuities will need to follow the requirements under the best-interest-contract exemption.

In the official materials about the annuity exemption that were posted online Wednesday, the Labor Department said that variable annuities and indexed annuities should be “subject to the greater protections” of the best-interest-contract exemption “given the complexity, investment risks, and conflicted sales practices” associated with them.

Mr. Bullard of the University of Mississippi applauded the change in the Labor Department’s final rule, saying Wednesday that such annuities “needed to be under the contract more than any other product because they are not subject to securities regulation and they are extremely complex, costly and often unsuitable.” Variable annuities are considered securities, just like mutual funds and individual stocks and bonds.

Mr. Anderson, of NAFA, declined to comment on the changes ahead of reviewing and analyzing the final rule.

Sales of indexed annuities have been growing at a strong clip amid market volatility and more willingness from certain types of firms, like banks and brokerages working with independent advisers, to sell these products.

Indexed annuity sales totaled about $54.5 billion last year, up roughly 13% from 2014, according to estimated data from insurance-industry-funded research firm Limra. Variable annuities, on the other hand, saw sales fall about 5% from 2014 to $133 billion last year.

In addition to commissions, agents often were awarded other incentives to sell indexed annuities, such as vacations, car leases and other perks. U.S. Sen. Elizabeth Warren (D., Mass.), a strong supporter of the new fiduciary rule, had previously criticized such practices.

Write to Anna Prior at anna.prior@wsj.com and Leslie Scism at leslie.scism@wsj.com