Equity Indexed Annuity
Definition of "Equity indexed annuity"
Modifications of the single premium deffered annuity, which usually guarantees at a minimum a return of a stipulated amount (usually at least 90% of the single premium accumulated at the annual rate of 3 or 4%). Additional interest can be earned that is linked to an increasing specified stock index. Thus, this insurance product guarantees the principal of the investment (single premium), while at the same time providing the opportunity for increasing values tied to the equities market. Under the standard nonforfeiture law, there must be guaranteed at the minimum 90% of the single premium accumulated at a rate of at least 3% interest per year. The index most often used as a link to this product is the S&P 500. Should the equity index increase, the invested single premium could be credited with a percentage of that increase, typically ranging from 50 to 100% of that increase. These contracts have terms ranging from one to fifteen years and at the end of the term, the owner/ANNUITANT can start a new term or transfer the cash value to another product. Should the contract be terminated before the end of a term, frequently the owner/annuitant forfeits all index gains and will receive only the minimum return guaranteed.
Popular Insurance Terms
Act by a company that authorizes an agent to act on its behalf. ...
Coverage for a physical structure, machinery, inventory, and merchandise within the structure in the event of earthquakes, flood collapses, and subsidence strikes. Even though coverage is ...
Tort of wrongful physical confinement of an individual. This is not restricted to physical confinement but includes any unjustified limitation of another's freedom of movement. If an ...
Coverage for direct or indirect property loss that can be analyzed under the following headings: Peril a particular peril may be included or excluded. For example, the Standard Fire Policy ...
Death benefit option in which a beneficiary of a life insurance policy receives the death benefit as a single sum payment instead of installments. ...
Legislation to eliminate most tax shelters and write-offs in exchange for lower rates for both corporation and individuals. It was intended to be revenue neutral; that is, to bring in the ...
Inability to perform one or more important daily business duties, or inability to perform the usual daily business duties for the time period usually required for the performance of such ...
Circumstances in life insurance in which, although a minimum rate is guaranteed, a policyowner may earn additional (excess) interest, depending on the company's investment return. ...
Trust in which a charity receives income from a donated asset for a specified number of years that it is held in that trust. After the specified period concludes, the principal is ...
Have a question or comment?
We're here to help.