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.
References in periodicals archive ?
the company said due to low interest rates, it has re-priced its equity indexed annuities three times so far this year.
The "fixed account" in most equity indexed annuities currently yield near 1.
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.
Plewes: I've started using a segmented income planning strategy for my clients, which accommodates SPIAs, deferred annuities, variable and equity indexed annuities, as well as managed money accounts, to help my clients and prospects maximize their income with inflation adjustment.
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.
Beginning in 2011, equity indexed annuities will be considered securities and therefore can be sold only by agents who are equity licensed.
Ranging from the Suze Ormans of the world to the Dateline NBC expose on equity indexed annuities that aired in the spring of 2008, we-and, more importantly, our clients and prospects--are constantly bombarded by self-appointed experts who pretend to understand the complexity of an array of financial products.
The staff of the department said Crawford had advised four Arkansas residents to sell some or all of their securities and invest in equity indexed annuities he sold.
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.
The National Association of Securities Dealers' 05-50 Notice to Members in August 2005 has had a "chilling effect" on sales of equity indexed annuities, as well as product design.
Athene Annuity is a wholly owned subsidiary of Athene Holding, a life insurance holding company focused principally on the retirement market and whose business, through its subsidiaries, is focused primarily on issuing and reinsuring fixed and equity indexed annuities and writing funding agreements and funding agreement-backed notes.
A strong proponent of equity indexed annuities back in the early and mid-1990s when they were still a relatively new product, Hamlin, CEO and founder of Somerset Wealth strategies in Portland, ore.