Indexed Annuity Definition

Most annuities pay the interest rate stated in the contract but an indexed annuity pays a minimum interest rate which may be 0 but never lower with the possibility of a higher rate depending on the performance of the relevant index.

Indexed annuity definition. An indexed annuity is a long-term retirement product that combines features of fixed and variable annuities. A fixed indexed annuity is a tax-deferred long-term savings option that provides principal protection in a down market and opportunity for growth. Generally the annuitys losses are limited while a portion of its gains are tied to the individual equity indexs returns.

An annuity is simply a contract between you and an insurance company. Many indexed annuities have a minimum interest guarantee. How Does an Indexed Annuity Work.

You buy an index variable annuity. You invest an amount of money in return for protection against down markets with the potential for investment growth linked to an index. However that doesnt always mean its impossible to lose money.

An indexed annuity is a deferred annuity whose return is tied to the performance of a particular equity market index. Generally the annuitys losses are limited while a portion of its gains are tied to the individual equity indexs returns. An index annuity is an annuity whose rate of return is based on a market index such as the SP 500 or the Nasdaq 100.

Unlike most variable annuities an indexed annuity sets limits on your. They can be purchased through an issuing insurance company in exchange for a one-time lump sum or periodic premium payments. 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.

Its similar to fixed annuities in that it has a minimum return guarantee. According to the terms of your annuity you make one or more purchase payments to an insurance company. Unlike equity indexed annuities standard annuities usually have a fixed interest rate.