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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The deal will make Beijing, China-based Anbang one of the leading insurers by market share in fixed indexed annuity products in the U.
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A fixed indexed annuity can protect retirees from market risk while producing an income stream guaranteed to last for life," Becker says.
The Financial Industry Regulatory Authority has oversight over some indexed annuity sales, she said.
So, that is why with much enthusiasm, I have recently welcomed an increase in fixed and indexed annuity rates.
With such a large number of baby boomers fitting into this category, it is no wonder fixed indexed annuity sales have skyrocketed in recent years.
operating subsidiary, Athene Annuity & Life Assurance Company, a Delaware-domiciled insurer focused on retail fixed and indexed annuity sales and reinsurance ("Athene Annuity"), will result in the second largest issuer of fixed indexed annuities in the United States.
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2) Clients within five years of retirement who are still fully invested in the market: Think about starting to lock in those returns with an indexed annuity.
Indexed annuity sales are down, yes, but they are not out.
Because of this low rate environment, producers and clients often question if now is the right time to invest in a fixed indexed annuity.