Indexed Annuity

Importance: 0.57

Is a company: no

Is a proper noun: no

Synonyms

  • equity-indexed annuity
  • stock index annuity

Definition of Indexed Annuity

  1. An annuity where income payments are based on an index such as the S&P 500, Dow Jones Industrial Average or NASDAQ Composite. Indexed annuities are generally regarded as safe investments, but most will have a guaranteed minimum return in order to protect the annuitant in the event that the index does poorly. Returns may be hindered by caps on the interest earned and/or fees.

Related Terms and Acronyms

  • Variable Annuity (VA) Bank,
    • An annuity where the payments received by the annuitant in the income phase of the annuity vary depending on how well the insurer's investment portfolio has performed.
  • Money Market Fund (MMF) Acronym, Important,
    • Mutual funds that invest in short-term debts or securities.
  • Secondary Market Bank,
    • A market where financial instruments such as stocks, bonds, options and futures are bought and sold to investors.
  • Stock Bank,
    • A share of the ownership of a company.
  • Security Bank,
    • Property designated as collateral.
    • A document stating ownership of a stock or bond.
    • A tradable financial implement that represents ownership, the rights to ownership or debt.
  • Index Bank,
    • A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes.
  • Inflation-Protected Annuity Definition,
    • An annuity that guarantees a return equal to or above inflation.
  • Derivatives Bank,
    • Financial contracts whose value is derived from the value of some underlying asset, rate or index. Derivatives are used as risk-management tools by governments and corporations to reduce exposure to risk, mainly related to fluctuations in foreign-exchange and interest rates. Derivative instruments include swaps, options, futures and forward contracts and are used by banks in two principal activities: sales/trading and asset/liability management.
  • Annual Crediting Cap Bank,
    • The highest rate that can be credited to an equity-indexed annuity in a year.
  • Deferred Annuity Bank,
    • An annuity that makes payments to the annuitant at some date in future instead of immediately.
  • Mutual Fund Definition,
    • A type of investment scheme that pools funds from multiple backers and invests them in securities such as stock or bonds.
  • Participation Rate Definition,
    • The rate at which changes in a stock index affect the profit credited to an annuity.
  • Maturity Guarantee Bank,
    • A guarantee that after a certain date a contract, such as a life insurance policy or annuity, will have a minimum dollar value.
  • Return Bank,
    • Any increase in value or in income you earn on purchase or investment.
  • Annuity Bank,
    • A financial instrument that disperses a number of payments over a set period of time.
    • A regular periodic payment made by an insurance company to a policyholder for a specified period of time.
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