A aktienindexierter annuity is an annuity, the value on a stock or index-linked market, the S & P 500 Index is the most common. Equity-indexed annuities have a guaranteed minimum interest rate (also known as ground "). This guarantee is usually a year in 0-3 percent. In return for this guarantee, equity-indexed annuities have a cap, the maximum efficiency from is making the investment in a given year. Currently, most pensions are indexedhave a ceiling of around 7 percent. Consequently, if the index annuity is linked to the returns, 10 percent in one year would be credited to the investor with only 7 percent return.
Each aktienindexierter pension has a participation rate that determines how much the increase in the index is used to calculate the return on the pension. Currently, most indexed annuities have a participation rate of between 70 and 100 percent. If the index return during the yearwas 7 percent, an index-linked annuity would be with a participation rate of 80 percent of the calculated value by 5.6 percent (80% from 7% or .8 x .07).
Equity-indexed annuities offer investors the opportunity to participate in the market gains, while the risks are minimized. However, given the limited S & P 500, were on average 10 percent per year over the last 100 years back, and most of these returns were coming in the years when the market much better than a rate of 10 percentreturn. Thus, an index-linked investment with a ceiling of 7 percent and a participation rate of 80 percent can decrease significantly over an extended period of time. In addition, surrender charges are often attached to these investments, limiting the investor's ability to sell without penalties.
Equity-indexed annuities are complex systems. Unfortunately, the sellers are offering high commissions to sell to these products. To raise the awareness of consumers, developed by the SECDocumentation should demonstrate to investors about the pitfalls of these investments. This document can be viewed from sec.gov / investor / pubs / equityidxannuity.htm. Consult with an independent fee only financial planners, who never see the commissions paid to whether these investments are really suitable for your situation.
