Equity-indexed Annuity Guarantees
Equity-indexed annuities are based on the volatility of the chosen index (e.g. S&P 500, Dow Jones Industrial Average, etc.). Below are what we view as the pro and cons of equity-indexed annuities:
The value of the contract doesn’t experience volatility and you will never experience a negative return, even if the market is down in a given year.
Performance caps and participation rates set by the insurance company can limit your upside potential and may be subject to change.
This type of annuity generally has longer surrender periods and higher surrender fee percentages, which can often exceed variable annuity surrender terms.