Indexed annuity

Indexed Annuity

An annuity with an interest rate linked to the performance of some index. 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. Each plan uses a different methodology in determining how the higher interest rate is calculated. Common features in its calculation include a participation rate, which determines how much of the annuity is linked to the index, and the rate cap, which sets a maximum interest rate on some plans. Many index annuities use the S&P 500 as their benchmark.

Indexed annuity.

An indexed annuity is a deferred annuity whose return is tied to the performance of a particular equity market index.

Your investment principal is usually protected against severe market downturns, in that you may have an annual return of 0% but not less than 0%.

However, earnings are generally capped at a fixed percentage, so any index gains that are above the cap are not reflected in your annual return.

Indexed annuity contracts generally require you to commit your assets for a particular term, such as 5, 10, or 15 years. Some but not all contracts limit your participation rate, which means that only a percentage of your premium has a potential to earn a rate higher than a guaranteed rate.

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Because an indexed annuity is a CD [-like] product.
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Indexed annuity sales are down, yes, but they are not out.
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Indexed annuity writers were on track in late December to achieve their third consecutive year of record sales, as buyers sought to protect their assets from frightening volatility in the stock market, and to earn more than prevailing low-interest rates.
Rule 151A interprets indexed annuities not to be "annuity contracts" under the insurance exemption if amounts payable by the issuing insurance company under the indexed annuity contract are more likely than not to exceed the amounts guaranteed under the contract.
The group, the Indexed Annuity Leadership Council, has posted the video, "How to Tell FIA Facts From FIA Fiction," on YouTube.