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
Individual to whom rights to a benefit are assigned. A life insurance policy is assigned by the collateral borrower (assignor) to the collateral creditor (assignee) as security for a loan. ...
Facilities for senior adults who pay an entrance fee to move into the facility as well as a monthly fee. The adults receive, in return, a place to live and long-term care usually for the ...
Liability insurance that extends beyond the end of the policy period of a liability insurance policy written on a claims-made basis. Liability claims are often made long after the accident ...
Percentage of total assets set aside by an insurance company to provide for unexpected losses. In general, a minimum of a 5% surplus ratio (5 cents in reserve for each $1 of assets) is ...
Right of a certificate holder to convert group life or group health insurance to an individual policy without a physical examination to furnish evidence of insurability. Usually this must ...
Statement regarding an insured's retention of low-severity risks because they are not catastrophic, and can be absorbed without having a dramatic effect on the financial structure of a ...
Several basic property and/or liability policies combined to form a single policy. For example, the homeowners insurance policy is composed of such basic coverages as broad form personal ...
Same as term Binder: temporary insurance contract providing coverage until a permanent policy is issued. In property and casualty insurance, some agents have authority to bind the insurance ...
Presentation of data that excludes the first 5 to 10 years of experience of those who purchase life insurance. A mortality table shows the number of deaths per 1000 of a group of people. ...
Have a question or comment?
We're here to help.