What is the main feature of equity indexed concept?

Special Considerations. A key feature of equity-indexed annuities is the participation rate, which basically limits the extent to which the annuity owner participates in market gains.

What are the characteristics of an annuity?

In general, annuities have the following features.
  • Tax deferral on investment earnings. …
  • Protection from creditors. …
  • An array of investment options. …
  • Taxfree transfers among investment options. …
  • Lifetime income. …
  • Benefits to heirs.

Which of these are features of indexed annuity products?

Indexed Annuity Features
  • • Variable, index-linked yield.
  • • Crediting Method.
  • • Minimum guaranteed rate.
  • • Tax-deferral.
  • • Single-premium.

Which benefit can be found in an equity-indexed annuity?

Indexed annuities are designed to provide a conservative retirement income option with several benefits, including protection from loss, guaranteed minimum returns and deferred tax payments. But they have their drawbacks, including complex contract agreements and lower returns than other investment options.

Which of the following is characteristic of a fixed annuity?

Which of the following is characteristic of fixed annuities? Interest rates are fixed during both phases of the annuity. Each payment amount is fixed, and premiums are invested in the insurer’s general account.

What is considered to be a characteristic of an immediate annuity?

What is considered to be a characteristic of an immediate annuity? “Benefit payments start within one payment period of purchase“. An immediate annuity is designed to make its first benefit payment to the annuitant at one payment interval from the date of purchase.

What is equity-indexed annuity?

Indexed annuities—also known as “equity-indexed annuities” or “fixed-indexed annuities”—are complex financial instruments that have characteristics of both fixed and variable annuities. Indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index, hence the name.

What is true about equity-indexed annuities?

Indexed equity annuities offer a participation rate that can limit the extent to which the annuity owner can participate in market gains. Investors receive protection against downside risk in exchange for limited profits, breaking even each year a down market occurs.

Which of the following terms describe equity-indexed annuities?

Which of the following terms describe Equity-Indexed Annuities? Equity Indexed annuities are an insurance product and are currently not defined as a “security.” They give a return tied to the performance of the Standard and Poor’s 500 Index, but this is subject to an annual cap of typically 7-9%.

What is the basic function of an annuity?

An annuity is a long-term insurance product that provides guaranteed income. Annuities are a common source of retirement income because they provide a steady stream of payments at regular intervals and because their earnings grow tax-deferred1 until you withdraw funds.

What are the classification of annuities?

There are four basic types of annuities to meet your needs: immediate fixed, immediate variable, deferred fixed, and deferred variable annuities. These four types are based on two primary factors: when you want to start receiving payments and how you would like your annuity to grow.

What are the primary characteristics of an annuity differentiate between an ordinary annuity and an annuity due?

An ordinary annuity means you are paid at the end of your covered term; an annuity due pays you at the beginning of a covered term.

What is an example of an annuity?

An annuity is a series of payments made at equal intervals. Examples of annuities are regular deposits to a savings account, monthly home mortgage payments, monthly insurance payments and pension payments.

What are the 2 classifications of annuity?

The main types are fixed and variable annuities and immediate and deferred annuities.

What are the four types of annuities?

There are five major categories of annuities — fixed annuities, variable annuities, fixed-indexed annuities, immediate annuities and deferred annuities. Which is best for you depends on several variables, including your risk orientation, income goals, and when you want to begin receiving annuity income.

What are the 5 different types of annuity?

Types of Annuities in India
  • Immediate Annuity. An immediate annuity essentially refers to the annuity wherein the premium is paid in a lump sum and not multiple numbers of times. …
  • Deferred Annuity. …
  • Fixed Annuity. …
  • Variable Annuity. …
  • Lump-sum Annuity.

What are the 3 types of annuities?

The three main types of annuities are fixed annuities, fixed indexed annuities and variable annuities, which can be immediate or deferred. The immediate and deferred classifications indicate when you will begin receiving payments.

How does an indexed annuity work?

An indexed annuity pays a rate of interest based on a particular market index, such as the S&P 500. Indexed annuities give buyers an opportunity to benefit when the financial markets perform well, unlike fixed annuities, which pay a set interest rate regardless.