Equity Indexed Annuities
An equity-indexed annuity is a combination of a fixed annuity and one that is tied to the performance of a benchmark index. In short, equity-indexed annuities give you the best of both worlds – with none of the risk.
As with a fixed annuity, you get the low-risk appeal of a guaranteed minimum return.
Fixed annuities pay guaranteed rates of interest, which makes them appealing to investors wary of losses with other products. What also makes them appealing are their low investment minimums – usually $10,000 to $50,000 – and the fact that the interest they pay is tax deferred.
The upside to equity indexed annuities is that you have a shot at higher gains than you do with a fixed annuity, since an equity indexed annuity’s return is tied to the performance of a benchmark index, such as the Standard & Poor’s 500. An equity-indexed annuity allows you to participate in the upside when the market is climbing, while protecting you against the downside since you’ll earn a guaranteed minimum return regardless of market performance.
In short, an equity-indexed annuity may pay a higher return than a standard fixed annuity would, but have less risk than other products.
Equity-indexed annuities can be complicated investment vehicles, therefore you should always seek the advice of your trusted agent.
FFG agents are here to help you navigate these investment choices with confidence.