Search results
Results from the WOW.Com Content Network
What Is an Index Annuity? Index annuities–also known as indexed annuities–are a hybrid investment and insurance product that offers investment returns based on a market index, such as the S&P 500.
An indexed annuity (the word equity previously tied to indexed annuities has been removed to help prevent the assumption of stock market investing being present in these products) in the United States is a type of tax-deferred annuity whose credited interest is linked to an equity index—typically the S&P 500 or international index.
Each annuity is a contract between you and an insurance company: You provide the company money now, and they promise to pay you a steady income later, potentially for the rest of your life.
The annuity contract is the legal document that outlines the terms of the annuity, including its payout schedule, surrender fees and other costs. It’s important to read the contract carefully ...
A deferred annuity that permits allocations to stock or bond funds and for which the account value is not guaranteed to stay above the initial amount invested is called a variable annuity (VA). A new category of deferred annuity, called the fixed indexed annuity (FIA) emerged in 1995 (originally called an Equity-Indexed Annuity). [5]
The same investment being tracked in the index annuity with an initial investment of $100,000, a 40% loss after one year is replaced with a 0 and the account balance is still $100,000, the subsequent 10% gain the following year is reduced to 6% due to the cap, which would be a $6,000 gain, so the $100,000 investment would be worth $106,000.
Another benefit of annuities is that you can choose where to invest the money with a variable or indexed annuity. In that regard, an annuity can help diversify your investment portfolio. Yes ...
Fixed: A fixed annuity guarantees a minimum rate of return to the policyholder and pays out over a specified term. Variable: A variable annuity lets you invest in mutual-fund-like investments.