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
Effort by an individual to continue to receive disability income benefits by taking a continuing sickness or injury. ...
Circumstance where an insurance company takes the place of an insured in bringing a liability suit against a third party who caused injury to the insured. For example, if a third party, ...
One that provides group health or pension benefits for a multiemployer plan. To lower the cost, small firms band together to take advantage of the economies of large group underwriting. ...
Insurance company formed according to the legal requirements of a foreign country. In order for an alien insurer to be able to carry on general operations and sell its products in a ...
Direct payment to a new custodian for a retirement plan. This payment is not a taxable event since it is not a distribution. The payment must be between like plans; for example, one ...
Life insurance in which the debit system is used to collect premiums on a monthly basis. ...
In health insurance, the applicable average rate charged for a semiprivate room in the geographical area in which the charge is incurred. ...
In property insurance policies, provision that excludes the insurance company's liability for indemnification of the insured for the insured's expenses incurred in the demolition of ...
The definition of special acceptance explains how two insurance institutions work together for the benefit of the masses. In order to define what special acceptance means, we must ...
Have a question or comment?
We're here to help.