An Equity Indexed Annuity Can Grow your Retirement Savings

There are a lot of financial options available for individuals focused on increasing their retirement savings. Stock market investments can result in huge gains, but also huge risk. Unfortunately, you could lose a large percentage of your retirement nest egg in the stock market, in a short period of time. There are savings mechanisms that protect your funds and interest earned, such as bank CDs and savings accounts, but they generally offer lower interest rates that tend to offset for the added security. How can you achieve higher interest earnings without putting your hard-earned principal at risk? With a product that offers a minimum rate of return, ties its interest earnings to a stock market index and guarantees that the principal deposit and any interest earnings credited will always be protected – an equity indexed annuity, also called a fixed indexed annuity.

With an equity indexed annuity, individuals can enjoy a significant portion of the stock market’s gains without any downside risk. The credited interest rate of an equity indexed annuity is joined to a specific index of the stock market, in many cases the S&P 500. This way, you are able to share in the gains of the market, up to a certain point (called a cap). If the market should not do so well over the term of your annuity contract, you still earn a minimum guaranteed rate of return. How does this work? Well, there are a few different ways that insurance companies credit returns on equity indexed annuities. The most common, the point-to-point method, calculates interest by looking at where the market index stands on the anniversary date of when the contract was issued and comparing that amount to where the index stands 12 months later. Insurance companies take the percentage change between those two dates and calculate that to be the annuity’s annual interest return (generally subject to a cap). Over time, the overall gain in the annuity may end up being higher than the returns of the market index itself, due to an equity indexed annuity’s ability to “lock-in” gains that can never be lost…even in a market downturn.

The most attractive feature, however, of an equity indexed annuity is that an individual can never end up with less than he or she started with. With the large number of unscrupulous investment products available today, an equity indexed annuity is a perfectly safe and stable way to grow your retirement nest egg.

Learn more about equity indexed annuities by visiting the Equity Indexed Annuities Explained Web page or call AnnuityAdvantage.com at 1-800-239-0356 to speak to an Annuity Specialist, who will help you learn more about your equity indexed annuity options.

Interest is based on current rates and subject to change without notice.

Send email to webmaster@annuityadvantage.com with questions or comments about this web site.
Copyright © 2001-2012 AnnuityAdvantage.com