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Benefits of Equity Indexed AnnuitiesThe benefits of annuities are obvious: a tax sheltered account that grows safely, often at a more favorable interest rate than bank CDs or savings accounts. People preparing for retirement are becoming aware of these great savings products and are buying them in droves. However, one type of annuity seems to sometimes get a bad rap from the media and consumers: equity indexed annuities. Why are these products getting such a bad rap? After all, there are benefits to equity indexed annuities that even surpass so-called “safer” annuity products like CD-type annuities and immediate annuities. The first benefit of equity indexed annuities is that their gains are tied to a particular stock market index, say the S&P 500 for example. So, instead of signing a contract for a conservative CD-type annuity, where you know you’ll earn 4% each year on your initial deposit, you buy an equity indexed annuity. Equity indexed annuities credit interest rates each year based upon the previous years performance of the stock market index that the annuity is aligned with. While you won’t be able to enjoy the peace of mind that comes along with knowing in advance the fixed interest rate you will earn, with equity indexed annuities you’ll be able to reap some of the stock market’s upswing, without sacrificing any of your principal or credited interest earnings in the event of a downswing. The second benefit is that equity indexed annuities are not currently regulated by the Security and Exchange Commission. While this may seem like a drawback rather than a benefit, the truth is that equity indexed annuities are simply insurance products. None of your money is invested directly in the stock market. Insurance products like equity indexed annuities are regulated by state insurance departments, which also sponsor guaranty associations that help to protect your principal (up to certain limits) in the event of an insurance company insolvency. Of course, guaranty terms vary state by state so it is important to confirm your state’s information by speaking with an Annuity Specialist. There are even more benefits to equity indexed annuities, too numerous to outline in this brief article. Are you interested in finding out more details? If so, then visit the Equity Indexed Annuities Explained web page to learn about equity indexed annuities’ crediting methods and terms. Or call 1-800-239-0356 today to speak to an Annuity Specialist.
¹ First year yield/rate reflects fixed rate plus premium bonus or interest rate enhancement. Interest is based on current rates and subject to change without notice.Send email to
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