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Annuities Equity Indexed Annuity

Equity indexed annuity is nothing but a normal interest-earning annuity with the only difference being that the interest earned is directly linked to the performance of an equity or stock index.

Equity Indexed Annuity

The demand for guaranteed investments has skyrocketed. In fact, over $240 Billion were sold last year in the US. New Equity Indexed Annuities currently insure the highest guaranteed rate available today for future retirement income.

There are now a variety of ways for you to guarantee your investment portfolio will not run out of money. In fact, a new Equity Indexed Annuity investment will guarantee an 8.2% compounded annual growth rate on your retirement income before you begin withdrawing money. This is a huge advantage to people planning retirement or in retirement.

Equity Indexed Annuities Have Two Main, But Separate Parts:

1. Your Investment Earnings or Cash Value Account.

2. Your Guaranteed Lifetime Retirement Income Calculation or Living Benefit Rider.

PART 1: Cash Value Account Explained

An equity indexed annuity is an investment with an insurance company that will allow you to participate in the gains of the stock market index with no downside risk.

For instance, if the S&P 500 index, which is a group of the largest 500 public companies in the US, went down -10% or -50% in a given contract year, the investor would simply earn 0% for that year and not lose any money.

Conversely, if the S&P index went up 10% or 50% in a contract year, the investor would earn interest based upon a crediting strategy formula.

Some equity index contracts have earned as high as 33% in a contract year with no risk potential.

PART 2: Living Benefit Riders Explained

Some equity index annuities have what is called a living benefit rider. This new option is a very powerful way for one to insure the growth of their future retirement income while one is awaiting retirement income.

Consider a living benefit rider as an insurance policy on your future income. No matter what happens to the market or your investment’s growth, you will be guaranteed your income will grow while you are deferring income payments.

The most powerful living benefit riders available today guarantee retirement income growth at an 8.2% annual compound rate. No other investment in the market will currently guarantee this high of a return for future retirement income, although some pretend to by offering 10% or 25% bonuses. Don’t be fooled, the devil is in the detailed prospectus.

Living Benefit Riders are used to calculate a lifetime payout amount. It is important to note that this rider value is not your money; it is simply used to calculate your retirement income payment.

If an advisor represents to you that this is your money, it is advisable to proceed with extreme caution and possibly even report the advisor to your local State Insurance Department for misrepresentation.

Equity Indexed Annuities should be mainly used for one of two reasons:

1. Guaranteeing the highest amount of lifetime income available in today's market.

2. Positioning conservative assets to significantly outpace CD's and not lose money to investment risk.

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