Equity Indexed Annuities

SmartAsset They offer protection against stock market losses as well as the potential to.

Equity indexed annuities. An indexed annuity is a contract issued and guaranteed 1 by an insurance company. The rate of growth of the contract is typically set annually by the insurance company issuing and guaranteeing the contract. A guaranteed interest rate determines roughly 90 of the returns while the performance of the index determines the rest.

What Is an Equity-Indexed Annuity. An equity indexed annuity is an annuity that is tied to an equity and has an interest rate that fluctuates with the performance of that equity. An equity-indexed annuity is a fixed annuity where the rate of interest is linked to the returns of an index such as the SP 500.

Many annuity contracts apply the guaranteed interest rate to only a. It is a suitable retirement plan. Equity indexed annuities may be safer than investing directly in index funds because the annuity company protects you against losses.

Unlike equity indexed annuities standard annuities usually have a fixed interest rate. Equity-indexed annuities are sold with the promise of nirvana for investors. In other words they werent designed to earn a lot of interest.

Initially indexed annuities were referred to as equity-indexed annuities or EIAs. Many life insurance companies offer equity indexed annuities as an alternative to standard annuities. Equity-indexed annuities give you the best of both worlds.

Insurance companies take your money and by law invest it in a. The marketing pitch usually goes something like this. Additionally you enjoy higher potential return but more risk than a fixed annuity.