Indexed Annuities

Indexed annuities (IAs) are another form of fixed annuity; however, the amount of interest credited to the contract is not declared in advance by the insurer but instead is tied to the performance of an independent market index, such as the S&P 500, the Dow Jones Industrial, or the Russell 2000.  The rate of the index return over the annuity’s interest crediting period forms the basis for the interest rate that will be credited to the annuity.  Like their traditional fixed counterparts, indexed annuities also provide for a minimum guaranteed rate of return.  At the end of the contract’s term, the contract will be credited with the greater of the index return or the minimum return. For this reason, an indexed annuity owner’s invested principal is protected.

For a free copy of the LIMRA September 2014 Update of The Facts of Life and Annuities click here.

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