What Is An Equity-Indexed Annuity

Equity Index Annuity:

An Index annuity is a fixed annuity whose interest rate is linked to performance of a financial index, such as the Standard and Poor's Composite Stock Price Index (S&P 500 Index).  Interest is calculated based on changes in the index and credited to your account on a regular basis.  Like other fixed annuities, index annuities also offer a guaranteed minimum interest rate and withdrawal amount, regardless of the product's performance.

Index annuities offer the potential to earn more interest than traditional fixed, deferred annuities when there are gains in the financial index (not to exceed any declared index caps, participation rates or fees), while limiting the market risks inherent to variable annuities.  Whereas variable annuities can actually lose value in "down" markets, the effect on indexed annuities is limited by a "zero" minimum credited rate. Click here to see an example. 

Benefits of an Index Annuity:

• Tax Advantages: During the accumulation phase, interest accrued inside annuities is not subject to federal or state income taxes until funds are withdrawn.  (A ten percent federal penalty may apply to distributions before age 59 1/2.)  This provision allows you to benefit from tax-deferred interest compounding.  During the payout phase, taxes are spread out over the entire expected duration of the stream of payments.
  
• Income for Life:  Annuities are the only products in the market that can guarantee a stream of payments you can't outlive.
• Safety of Premium:  Index annuities contain provision that allow you to limit your risk during a decline in the financial index.  Annuity guarantees are based on teh claims paying ability of the insurer.
• Growth Potential:  Even though the design of an index annuity limits its growth and normally will not equal the growth of the overall equity market, it offers the potential for a higher return than other forms of fixed accounts that provide downside protection.
    See our top Index Annuity Rates.
  

See Our Top Equity Indexed Annuity Rates!