How Do Equity Indexed Annuities Work?

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    David RacichPRO
    Fountain Hills, Arizona
    Indexed Annuities use domestic or foreign indices, some in combination with each other. Most annuity carriers buy an index option and exercise the option or allow the option to expire. The earnings are credited to the annuity without dividends through rate caps, participation rates or spreads (sometimes a combination.) While indexed annuities don’t debit negative returns, policy expenses may generate a negative account.
     
    Answered on June 20, 2013
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