EIAs are complex financial instruments that have characteristics of both fixed and
variable annuities. An indexed annuity earns interest that is directly linked to a stock or other equity index such as the Standard & Poor’s Composite Stock Price Index (the S&P 500*). The value of this index varies daily and is unpredictable in nature. Indexed
annuities are different from other annuities in the way they credit interest to the account. The interest credited is determined using a formula based on changes in the index to which the annuity is linked. Indexed annuities also promise to pay a minimum interest rate. EIAs also have the potential to earn higher returns than traditional fixed annuities when the stock market is rising. Their return varies more than a fixed annuity, but generally not as much as a variable annuity. So EIAs give you more risk (but more potential return) than a fixed annuity but less risk (and less potential return) than a variable annuity.
At the end of the investment period, the annuity owner will receive either a lump-sum
payment or regular payments. To learn more about the different types of annuities,
contact the investment professionals at Savage & Associates. We can talk with you about your unique needs to determine your investment needs.
Equity Indexed annuities generally have longer surrender charge periods than other
annuities and may have higher charges and expenses associated with them.
Calculation methods used for determining indexed interest rates vary among insurance
companies and rates may be capped. Indexed rates are generally based upon a
participation rate. A participation rate is the percentage of an index’s gain that a
contract owner receives (e.g., if the participation rate was 85% and the S&P 500 had a
gain of 10%, the interest rate would become 8.5%). Please consult your financial
representative for complete details on a specific annuity.
* The Standard & Poor's 500 Stock Index (“S&P 500® Index”) is a market-weighted equity index generally regarded as an indicator of the domestic large-cap market performance. Average annual total returns are historical and include changes in share price, reinvestment of dividends, and capital gains, if any. Indexes are unmanaged and not available for direct investment.
Call 419-475-8665 or fill out our on-line request form for more information or to schedule an exploratory appointment with our experienced professionals at Savage & Associates.