Equity Indexed Annuities: Fundamental Concepts and Issues
This paper is on Equity-Indexed Annuities (EIAs), also known as Indexed Annuities and (more recently) Fixed Indexed Annuities. A category of relatively new and increasingly popular annuities, EIAs are a type of fixed annuity whose credited interest rate depends on the performance of an external market index, with a guaranteed minimum return. EIAs offer the potential for larger interest credits than traditional fixed annuities, without the downside risk of direct equity investing.
EIA products, and certain sales and marketing practices, are being scrutinized from within and outside the insurance industry. This paper addresses key EIA product features, the current EIA marketplace, and issues and criticisms surrounding EIAs.
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