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 new company will focus on providing marketing strategies, product expertise, and back-office processing for fixed and equity-indexed annuities.
However, FINRA may be issuing a report on firms' practices on product-specific suitability guidelines for senior investors in the coming year or so, having noted that it has found that multiple firms have established such guidelines for seniors buying variable annuities, equity-indexed annuities, REITs and other high-yield alternative products.
Tiong, "Valuing equity-indexed annuities," North American Actuarial Journal, vol.
The order held that the Coopers advised clients to sell certain annuity contracts and to buy equity-indexed annuities, which caused some clients to suffer surrender charges and other fees while the Coopers earned commissions on the sales.
In this article, we introduce a premium principle for equity-indexed annuities (EIAs).
Five years ago, "Notice to Members 05-50 Equity-Indexed Annuities: Member Responsibilities for Supervising Sales of Unregistered Equity-Indexed Annuities" was released.
Excluding the change in valuation of option contracts supporting equity-indexed annuities, investment income increased $33.2 million, or 13 percent, to $298.2 million.
addresses the responsibility of firms to supervise the sale by their associated persons of equity-indexed annuities (EIAs) that are not registered under the federal securities laws." The Notice suggested that broker-dealers supervise the sale of all unregistered fixed indexed annuities, completely revising their treatment, making them more like a security than an insurance product.
Equity-indexed annuities may currently be sold by individuals who are not equity licensed (see footnote 6, page 89).
Bipartisan legislation would reverse a Securities and Exchange Commission decision to regulate equity-indexed annuities as securities.
The investment options are divided into categories ranging from "The Good" to "The Ugly." Examples include real estate and inflation-protected securities (good) and leveraged funds and equity-indexed annuities (ugly).
The Securities Department must refer such complaints to the Arkansas Insurance Department, which regulates variable and equity-indexed annuities.