Equity Indexed Annuity
What Does Equity Indexed Annuity Mean?
An equity-indexed annuity is an annuity linked to an equity index, featuring an interest rate that fluctuates based on the performance of that index.
Many life insurance companies offer equity-indexed annuities as an alternative to standard annuities. In contrast to equity-indexed annuities, standard annuities typically have a fixed interest rate.
Insuranceopedia Explains Equity Indexed Annuity
Equity-indexed annuities are typically linked to two types of equities: stocks and indexes. If these investments perform well, the interest rate of the annuity can increase. However, if they do not perform well, the annuity holder may earn less than they would have with a fixed interest rate.
Equity-indexed annuities are a popular choice for individuals seeking to earn a higher interest rate on their annuities instead of receiving the standard fixed interest rate.
