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Equity Index Annuities
A New Innovation

Could you imagine an annuity product that provides the long term potential growth of the stock market?

Could you imagine an investment product that provides the downside guarantees of an annuity?

Equity Index Annuities

The new innovation of the 90's. The Equity Index Annuity provides a;
    • This means that once you make a premium payment you will never have less in your account than your premium payment.

    • This means that once interest has been credited to your equity index annuity the value of your annuity will never decrease unless you make a withdrawal even if the stock market goes down.

    • This means that the Interest Rate set by the insurance comapny at the end of each policy year is based on the performance of the S&P 500 Index. The method by which the interest rate is calculated and the percentage of the gain of the S&P 500 Index that is credited to your annuity is referred to as the Participation Index Rate.

Glossary of Terms

The following are terms used in describing what an Equity Index Annuity is and how the interest rate is calculated.
  • Standard & Poors 500 - This is an index which was devised a number of years ago by the Standard & Poor's Company. Today the S&P 500 Index is widely regarded as the benchmark index by which U.S. stock market performance is measured.
  • Index Average - Instead of using the percentage change over the policy year some companies use an averaging method. They calculate the change by averaging the daily closing S&P 500 values or the monthly S&P 500 values. The averaging method also tends to lower the overall rate of return of the S&P 500 Index, similar to that of a "cap". In rising markets the averaging method limits the increase that would be credited to your annuity policy.
  • Highwater Method - Companies that use this method take the value of the S&P 500 Index on the day your policy is issued and subtract that value from the highest value the S&P 500 reaches during the term of your contract. The term of the most commonly used are 5 and 7 year durations. The difference between the value of the S&P 500 on the day you purchased your policy and the highest value reached is converted to a percenatge. The amount of money you intially deposited in your policy is multiplied buy their percentage change to arrive at your contract value.

  • "Standard & Poor's", "S&P 500", "Standard & Poor's 500" and "500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by companies offering Equity Index Annuities. The product is not sponsered, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representations regarding the advisability of purchasing the product.
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