What ill show up here?

  • An indexed annuity provides a rate of return based on the performance of a market index like the S&P 500.
  • You can invest your annuity premium into a single market index or across several indices.
  • Indexed annuities guarantee a minimum interest rate and you don’t lose money even if the market underperforms.
  • The issuing insurance company can cap your gains to protect itself from losses.

What will happen here?

Looks at the index value at various points and takes the highest of the values and compares it to the level at the start of the contract.

High Water Mark

Looks at the index value at various points and takes the highest of the values and compares it to the level at the start of the contract.

Testing Heading

Compares the change in the index rates at two preselected points in time. This can be the start and end of the contract term.

Pros

  • As with all annuity types, indexed annuities are tax-deferred products.
  • When stocks in your index, such as the S&P 500, increase in value, the value of your contract increases.
  • The added increase in yields may serve as a hedge against inflation.

Cons

  • As with all annuity types, indexed annuities are tax-deferred products.
  • Lack of fee transparency. Fees may not be clearly disclosed.
  • High sales commissions.

14 Cited Articles

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  1. Brown, J. (2017, April 10). 5 Facts About Equity-Indexed Annuities. Retrieved from https://money.usnews.com/investing/articles/2017-04-10/5-facts-about-equity-indexed-annuities

  2.  Financial Industry Regulatory Authority. (n.d.). Equity-Indexed Annuities – A Complex Choice. Retrieved from https://www.finra.org/investors/alerts/equity-indexed-annuities-complex-choice