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 ?
Another product category is the equity-indexed annuity, which ties performance to a major stock index.
Moore, "Optimal surrender strategies for equity-indexed annuity investors," Insurance: Mathematics & Economics, vol.
Neasham says he sold his 83-year-old client the equity-indexed annuity she wanted, and did so by the book.
An equity-indexed annuity (EIA) is an insurance product with benefits linked to the performance of an equity market.
(c) Equity-Indexed Annuity. The equity-indexed annuity (EIA) is a hybrid of the fixed and variable annuities (see discussion, page 425).
* An equity-indexed annuity is a type of variable annuity whose return is based on the performance of a specified equity index, such as the S&P 500 Composite Stock Price Index.
The NAIC regulations give insurers the flexibility to offer an equity-indexed annuity that reduces the minimum guaranteed interest rate payable by insurers by up to one percent.
Huck was named but not charged in a November 2005 case, when he allegedly pressured a Massachusetts investor to liquidate certain securities holdings to buy an equity-indexed annuity, and that he had sold 20 such products to residents since 2004.
has launched Conseco Command, a single-premium equity-indexed annuity that provides predetermined "free-out" windows for owners to access funds without surrender charges.
Question--In recent years, a new product, called an "equity-indexed annuity" has burst on the scene.
equity-indexed annuity and equity-indexed life insurance markets.