equity-indexed annuity

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Equity-Indexed Annuity

An annuity with an interest rate linked to the performance of an equity index. Most annuities pay the interest rate stated in the contract, but an equity-indexed annuity pays a minimum interest rate, with the possibility of a higher rate depending on the performance of the relevant stock or equity 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 equity-index annuities use the Standard & Poor's 500 Composite Stock Price Index (S&P 500) as their benchmark.

equity-indexed annuity

A contract with an insurance company that promises periodic payments keyed in a specified manner to a stock market index. Unlike variable annuities, equity-indexed annuities specify a guaranteed minimum return that is typically 3%. These contracts may also specify an upper limit (cap) on the return that is paid. Indexing methods vary, and surrender charges often apply to early withdrawals.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

References in periodicals archive ?

According to the complaint, Horowitz met some of his victims by attending other financial advisors' "seminar dinners" on equity indexed annuities. The complaint alleges that he presented himself as having developed proprietary trading software that would lead to high returns and profits.

Galvin Charges Firm With Unregistered, Fraudulent Advising: Enforcement

In the U.S., the company said due to low interest rates, it has re-priced its equity indexed annuities three times so far this year.

Aviva PLC nears sale of U.S. unit

Investors choosing fixed index or equity indexed annuities should keep in mind that the contract will not be credited with the dividends that are generated by the equities (if an equity index is being used) underlying the selected measuring index.

Choosing an annuity: what accountants need to know

Wilkerson: Equity indexed annuities have been plagued by controversy, and we don't offer them to our clients.

The annuity market is gathering steam: annuities have been red hot for the last couple of years, offering a more certain place for spooked investors to park their money. Is the trend a lasting one? Three top producers weigh in

Marketing of equity indexed annuities continues to run into compliance headwinds despite a go-ahead from Congress and the courts as well as a commitment from the industry to clean up its act.

Lighting the fuse: will market conduct concerns in Florida and Illinois put equity indexed annuities into a new regulatory hurt locker?

Moore even suggested not calling them "equity indexed annuities" because of the potential confusion; as a fixed product, she said, they should simply be called "indexed annuities."

Indexed and variable products: tools for today and tomorrow: how have the roles of these flexible yet diverse markets changed?

THE SECURITIES AND Exchange Commission on December 8 agreed to a two-year delay of the effective date of Rule 151A, which would require that equity indexed annuities be regulated as securities.

SEC proposes two-year stay on rule 151A

Beginning in 2011, equity indexed annuities will be considered securities and therefore can be sold only by agents who are equity licensed.

Equity-indexed annuity

EQUITY INDEXED ANNUITIES AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY WWW.AMERICAN-EQUITY.COM 888-221-1234 Product name Bonus gold Availability All states except AK CT DE MN OK OR UT WA Maximum issue age 80 (Q); 85 (NQ) Minimum purchase $5,000 Crediting method 9 different crediting methods available Minimum 80% of 1st year premiums & premium bonus, guaranteed rate compounded annually at MGIR (Currently 3%) Available riders Lifetime income Benefit rider, nursing Care rider, Terminal illness rider Unique features True 10% Premium Bonus (for issue ages 0-80, 5% for 81-85); Full Contract value Upon Death.

Annuities

Gwin, who formerly held insurance licenses in Missouri and Arkansas, gained the trust of northwest Arkansas retirees by selling them equity indexed annuities. Several years later, he sold these residents securities guaranteeing them between 8 percent and 18 percent a year based on a vague business involving short-term trading that was never clearly explained.

Securities chief issues 2 cease-and-desist orders

But some advisers received thank-you notes, a good number of which probably came from clients who had purchased indexed annuities, a hybrid type of investment previously called equity indexed annuities.

Quite the contrary: investors who bought indexed annuities a year ago are sleeping much better than owners of variable annuities or mutual funds

"Particularly in comparison to the market in other states, there are very few equity indexed annuities currently offered to consumers in New York, due to the fact that the limitations created by the current law do not allow for insurers to offer the favorable benefits and features that are afforded to consumers in other states."

NYS equity indexed annuity products would have the most strenuous consumer protections requirements in the US