Equity Indexed Annuity Facts!
An Equity Indexed Annuity is a contract between you and an Insurance Company that says you will pay for the annuity in either a single payment (401k rollover), or multiple payments over time. In return the Insurance Company promises to make payments from the annuity to you in a series of payments to you over a designated time period such as 10 years, 20 years, even lifetime payments. Lifetime payments continue even if your account falls to a zero balance over a number of years! If you die prematurely, the entire balance, including any bonus Match and all accumulated interest would go to your designated beneficiary or beneficiaries and in most cases avoids probate!
An Equity Indexed Annuity calculates annual interest based on the performance of a stock, bond, or commodity index. The index is only used as a benchmark, YOUR FUNDS ARE NEVER INVESTED IN THE STOCK MARKET! The value of your money will never decline as long as it is in the annuity, but can increase with a rising index. Once interest is credited, it can NEVER be lost due to interest adjustments or negative market fluctuations.
How are Equity Indexed Annuities Protected?
Equity Indexed Annuities are backed by the Reserves, Capital, and Surplus of the issuing Insurance Company. Insurance Companies are strictly regulated, monitored, and audited by Department of Insurance in the States where it conducts business. A key focus of these State Regulators is the solvency of the Companies that operate in their State. In the unlikely event that the financial condition of a carrier becomes impaired, the State Regulators with the Department of Insurance have the ability to take over the operations of the company in a process known as rehabilitation. Additionally, California has established a Guaranty Association to aid in ensuring that policyholders benefits are paid. No equity indexed annuity owner has ever lost a penny of their annuity’s value due to adverse market movement or carrier insolvency.