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
Provision in a marine insurance policy in which agreement has been reached between the insured and the insurance company concerning the worth of the property that is to be covered under the ...
Federal statute relating to drug abuse policies that requires all employers with federal contracts at least equal to $25,000 to certify, as a condition of receiving a federal contract, that ...
Situation wherein the agent's conduct causes a client or prospective insured reasonably to believe that the agent has the authority to sell an insurance policy and contract on behalf of the ...
Coverage protecting future profits to be earned from a manufacturer's inventory. A manufacturer may lose all or part of an inventory of finished goods due to a peril such as fire and still ...
Means of projecting the costs of pension plans on a level basis over a specified future period of time. The actuarial value of each employee's future benefits to be paid at retirement is ...
Presence of other contract (s) covering the same conditions. When more than one policy covers the exposure, each policy will pay an equal share of the loss. ...
Health plans established by associations of hospitals and physicians to provide hospital service and care, and medical and surgical care. ...
Legal right of a passenger in an automobile involved in an accident to bring a liability suit against the driver. It is deemed that a special standard of care is owed by an automobile ...
Estimate of an asset that is used to determine tax obligations. It is usually in the interest of the owner to have a low value put on a piece of property for tax purposes. However, the ...
Have a question or comment?
We're here to help.