Investing money in annuities is a best way for accumulating funds for one of the harder period of life i.e. retirement. An annuity is a retirement plan where you have to invest a particular amount every year with the interest rate remaining fixed throughout. There are various types of annuities offered by insurance companies, but equity indexed annuities are most popular among them.

“(EIA) Equity Indexed Annuities are the fixed annuities that pay a baseline return (minimum guaranteed interest) but which as a linking feature with a market index, allows the annuity to grow with changes in the market. EIAs are generally tied to an index such as the S&P-500 or NASDAQ-100.”

Equity index annuities are generally related to a particular stock market index such as the S&P 500 or the Dow Jones Industrial Average. Simply equity indexed annuities earn interest that is linked to a stock or other equity index. It means the income of an annuitant depends on the performance of stock index. If stock rises, you benefit from the increase. If stock falls, you do not lose any money.

Most equity indexed annuities guarantee a minimum return, typically 3%. Equity indexed annuities offer you benefit of investing in stock market without the coupled risks of losing your money. You are assured to receive your principal sum even in the worst conditions of market.

Return of equity indexed annuities is based on participation rate that is a pre-decided rate and varies according to market conditions. The general participation rate offered for most equity index annuities is between 70 to 90 percent. In order to receive maximum benefits equity index annuities should not be withdrawn beFor the term.

Keep your annuities untouched for a long period. The typical time is a minimum of 7 years. This ensures that you will get the full benefit of having invested in an equity index annuity. If you withdraw annuity, you have to bear the withdrawal penalties.

Equity indexed annuities are best options for pilling up the funds for future. But due to the complexity of equity indexed annuities it is suggested to consult with a knowledgeable annuity broker to see how they might fit into your financial plan.

For more info on equity index annuities, click here or call an Annuity Specialist at AnnuityForLife.com, 1-888-261-6237