As you might know, fixed annuities are investments that provide guarantees. The investment is set in stone before the contract is signed. Equity indexed annuities (also referred to as fixed indexed annuities) are considered to be a type of fixed annuity because they have a guaranteed rate of return that cannot change or decrease during the lifetime of your plan. This makes them ideal for people who want to save money but are not sure how much they will need when retirement arrives.
Why is an equity-indexed annuity considered to be a fixed annuity?
The main advantages of indexed annuities for contract owners are:
- A contract owner may apply a new interest rate to premiums allocated to an index strategy based on stock market performance if the closing level of an external index rises.
- Even if the target index’s closing value falls below its opening level, the invested principle and any previously credited interest are protected against loss.
- The interest crediting rate will never be less than the guaranteed rate outlined in the indexed annuity contract.
Indexed annuities, as the name implies, provide investors with higher interest stability than declared-rate annuity contracts. Because equity-indexed annuities credit interest based on the increase in an equity index’s closing level, they offer protection against purchasing power risk.
Equity indexed annuities are becoming increasingly popular as people learn about their benefits. Use our interest rate annuity calculator to get estimates. Then contact us if you’re interested in learning more or want a quote for your own plan. We would be happy to help you get started on this important step toward a secure retirement.
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