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
Protection against natural disasters that may strike crops. Coverage on all risks basis began in 1948 under the auspices of the U.S. Department of Agriculture. Premiums reflect actual ...
Maximum that an insurance company can underwrite. The limits of coverage that a property and casualty company can underwrite are determined by its retained earnings and invested capital. ...
Endowment period of time, in life insurance, at which the face amount of the policy is payable to the insured. ...
Special type of charitable remainder trust (CRT) under which a designated beneficiary (cannot be a charitable beneficiary) receives an annual fixed income. The grantor of the trust is ...
(coinsurance) plan where a portion of medical expenses are paid by an insured. Some health insurance policies provide that the insured shares expenses with the insurer according to a ...
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. ...
Violation of duty in marine insurance, such as acts of the master and crew of a ship that result in damage to the vessel including purposefully running it aground, diverting it from its ...
Factor considered in determining amount of life insurance to purchase in order that funds will be available to pay for a child's education expenses in the event of the premature death of ...
Property loss in which the insured peril is the proximate cause (an unbroken chain of events) of the damage or destruction. Most basic property insurance policies (such as the standard fire ...
Have a question or comment?
We're here to help.