WHAT ARE EQUITY-INDEXED ANNUITIES?
An equity-indexed annuity is a fixed annuity, either immediate or deferred, that earns interest or provides benefits that are linked to an external equity reference or an equity index. The value of the index might be tied to a stock or other equity index. One of the most commonly used indices is Standard & Poors 500 Composite Stock Price Index (the S&P 500), which is an equity index. The value of any index varies from day to day and is not predictable. When you buy an equity-indexed annuity you own an insurance contract. You are not buying shares of any stock or index. While immediate equity-indexed annuities may be available, this appendix will focus on deferred equity-indexed annuities. HOW ARE THEY DIFFERENT FROM OTHER FIXED ANNUITIES? An equity-indexed annuity is different from other fixed annuities because of the way it credits interest to your annuitys value. Some fixed annuities only credit interest calculated at a rate set in the contract. Other fixed annuities also credit inte
