Insurance Q&A

October 9, 2009

What is an Indexed Annuity?

Filed under: Uncategorized — rrroark @ 10:17 am

An Indexed Annuity is a Fixed Annuity with an interest crediting option linked to an outside index.

Because it is, first and foremost, a Fixed Annuity, it has tax-deferred accumulation, a guaranteed minimum value, and a guaranteed lifetime income at retirement. Then the interest crediting option is added that links the interest credited to the annuity to the performance of a specific index; for example the Standard & Poor’s 500 Stock Index (S&P 500). IT IS NOT AN INVESTMENT IN THE INDEX!!!! Thus there is not investment loss risk.

They are more properly referred to as Fixed Indexed Annuities and they give their contractholders a choice. Based on their risk tolerance and goals, contract can select a traditional “declared” rate on interest or they can select one or more indexing strategies or both.

I have produced an extensive Windows Media Video presentation on the subject that can be downloaded to your computer from this location.

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