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
Model state law providing guidelines by regulators for valuation of securities on the books of insurance companies. The act has two sections: one for valuation of fixed rate bonds and debt ...
System of charges to an insured that fluctuates according to the loss experience of that insured. This is a form of experience rating. ...
Possibility of loss associated with water transportation, including hull damage or destruction, cargo damage or destruction, liability to others for bodily injury, and property damage or ...
Individual who represents a ceding insurance company in placing its business with a re insurer. ...
Death caused by a person without legal justification. Wrongful death may be the result of negligence, such as when a drunken driver hits and kills someone; or it may be intentional, as when ...
System for calculating the relationship between a pension plan's present cost and its present future benefits. This relationship shows the extent to which a pension plan's benefits are ...
Commercial liability insurance form providing coverage for an insured business in the event of a pollution liability suit. The insurance provides claims made basis liability coverage. ...
Choice among the following options made by retiree prior to retirement concerning the distribution of benefits: option since all income payments cease upon the death of the retiree. Monthly ...
Coverage in the event of property damage or destruction resulting from wrongful installation of equipment. ...
Have a question or comment?
We're here to help.