An equity-indexed annuity is a hybrid between a fixed and variable annuity. It is a fixed annuity by legal statute, but it has offerings inside of it that allow the contract holder to invest in stock market indices such as the S&P 500, Dow Jones, and Nasdaq 100. One of the main features of EIA's are their ability to guarantee a floor to your earnings with no loss once earned. If your account credits from $50,000 to $53,000 in a given contract year, most EIA contracts will guarantee that you will not "back up" from $53,000 but rather earn $0 if the market loses the following year. EIA's offer fixed accounts within their contracts that offer a guaranteed rate for usually one year.
Like almost all annuities, EIA's have surrender charge periods (usually 5-10 years) that encourage the contract holder to only withdraw a small portion if needed to help foster long-term growth. EIA's can be an excellent addition to a portfolio that is trying to mitigate risk but also add a growth component to a conservative approach. EIA's are commonly misunderstood in the general public, but a good investment advisor can provide the full features of the investment vehicle that could make a position in a well-balanced portfolio.
Jason R. Tate, ChFC, CLU, CASL
Jason Tate Financial Consulting
Company Website: jtfc.net
1.615.720.1989
index annuity commissions, index annuity rates, index annuity reviews
Source: http://docphy.com/business-industry/business/equity-indexed-annuity.html
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