ANNUITY

annuities search the web annuity insurance sell life insurance transfers mutual funds rate annuity insurance sell life insurance transfers mutual funds rate life insurance companies term life insurance insurance companies life insurance quotes insurance money insurance companies disability financial commercial insurance sell trade selling cars cash investors make money life insurance life insurance agents interest insurance auto life travel insurance business insurance equity indexed annuities are you considering buying an equity indexed annuity the following helpsâ explain equity indexed annuities and provides resources for obtaining additional information what is an equity indexed annuity an equity indexed annuity is a special type of contract between you and an insurance company during the accumulation period â when you make either a lump sum payment or a series of payments â the insurance company credits you with a return that is based on changes in an equity index such as the s amp p 500 composite stock price index the insurance company typically guarantees a minimum return guaranteed minimum return rates vary after the accumulation period the insurance company will make periodic payments to you under the terms of your contract unless you choose to receive your contract value in a lump sum can you lose money buying an equity indexed annuity you can lose money buying an equity indexed annuity especially if you need to cancel your annuity early even with a guarantee you can still lose money if your guarantee is based on an amount thatâ s less than the full amount of your purchase payments in many cases it will take several years for an equity index annuityâ s minimum guarantee to â break even â you also may have to pay a significant surrender charge and tax penalties if you cancel early in addition in some cases insurance companies may not credit you with index linked interest if you do not hold your contract to maturity what are some of the contract features of equity indexed annuities equity indexed annuities are complicated products that may contain several features that can affect your return you should fully understand how an equity indexed annuity computes its index linked interest rate before you buy an insurance company may credit you with a lower return than the actual indexâ s gain some common features used to compute an equity indexed annuityâ s interest rate include participation rates the participation rate determines how much of the indexâ s increase will be used to compute the index linked interest rate for example if the participation rate is 80 and the index increases 9 the return credited to your annuity would be 7 2 9 x 80 7 2 interest rate caps some equity indexed annuities set a maximum rate of interest that the equity indexed annuity can earn if a contract has an upper limit or cap of 7 and the index linked to the annuity gained 7 2 only 7 would be credited to the annuity margin spread administrative fee the index linked interest for some annuities is determined by subtracting a percentage from any gain in the index this fee is sometimes called the â margin â â spread â or â administrative fee â in the case of an annuity with a â spreadâ of 3 if the index gained 9 the return credited to the annuity would be 6 9 3 6 another feature that can have a dramatic impact on an equity indexed annuityâ s return is its indexing method or how the amount of change in the relevant index is determined some common indexing methods include annual reset or ratchet this method credits index linked interest based on any increase in index value from the beginning to the end of the year point to point this method credits index linked interest based on any increase in index value from the beginning to the end of the contractâ s term high water mark this method credits index linked interest based on any increase in index value from the index level at the beginning of the contractâ s term to the highest index value at various points during the contractâ s term often annual anniversaries of when you purchased the annuity these and other features may be included in an equity indexed annuity you are considering before you decide to buy an equity indexed annuity you should understand how each feature works and what impact together with other features it may have on the annuityâ s potential return are equity indexed annuities registered with the securities and exchange commission equity indexed annuities combine features of traditional insurance products guaranteed minimum return and traditional securities return linked to equity markets depending on the mix of features an equity indexed annuity may or may not be a security the typical equity indexed annuity is not registered with the sec who should i contact if i have a problem if you have a problem with an equity indexed annuity you should contact your state insurance commissioner in addition we would also like to hear from you although we will likely only have jurisdiction to resolve your particular issue if your equity indexed annuity is a security you can send us your complaint using our online complaint form atâ sec gov you can also reachâ the secâ by regular mail at securities and exchange commission office of investor education and advocacy 100 f street n e washington d c 20549 0213 where can i find more information before you purchase an equity indexed annuity you should understand how it works what factors to consider in making your decision and how you can avoid common problems â an â investor alertâ concerning equity indexed annuities is available on the nasdâ s website for more information about investing wisely and avoiding fraud please check out the investor information sectionâ sec gov variable annuities and variable life products questions to ask variable annuities and variable life insurance products combine features of insurance and securities investments â they can be an important part of your retirement and investment plans but it is important to make sure they are right for you â recently the sec issued a report on how these products are sold â based on the problems weâ ve seen here are some important questions we recommend that you ask before purchasing a variable product â might i need this money in the next few years â variable products are long term investment vehicles â they arenâ t appropriate if youâ ll need your money in the short term because substantial taxes and insurance company charges may apply if you withdraw your money early do i have enough money right now to purchase this product â because variable products are long term investments it can be dangerous to your financial health to mortgage your home in order to purchase a variable annuity or variable life insurance product â if a salesperson pressures you to do so call us instead at 1 800 sec 0330 am i being urged to purchase a variable annuity or variable insurance in my ira 401 k or other retirement account â one key benefit to purchasing variable products is the fact that earnings on the invested money accumulate tax deferred â but these tax benefits are of no value if youâ re purchasing the product in your ira 401 k or other retirement account because those accounts are already tax advantaged â make sure that the features youâ re buying are worth the money youâ re paying does the firm recommend this product to all its customers â everyone has different investment objectives â variable products are not â one size fits all â â be careful if a salesman recommends one product to all customers â that may mean the product isnâ t right for you what will i lose if i exchange this product â if a salesperson is urging you to exchange your variable product for a new contract youâ ll need to compare both products carefully because the guaranteed death benefit of the new product may be less than the old you may have to pay a â surrender chargeâ to get out of the old product the new product may impose higher annual fees and a new surrender charge andâ the new product may impose a new surrender charge period for more information on how variable annuities work and what you should know before purchasing please read variable annuities what you should know provided free as a courtesy to potential annuity purchasersâ by www retirementannuities org â www equityindexedannuities org and www anuity org interested inâ tax exempt or tax free fixed income investments please see www taxfreemunicipalbonds net â or www municipal bonds org for more greatâ information about tax free or tax exempt municipal bonds interested in mutual funds please see www noloadmutualfund org and www noloadmutualfunds org 160 â 2010 annuites org all rights reserved