Tired of watching your bank account creep up slowly and without much momentum? Low interest rate CDs, savings and money market accounts are safe, but generally don’t offer much in the way of yield. Investing in the stock market is exciting and can provide fabulous gains during certain periods of time, but you can also lose the shirt off your back if you are not careful. Equity indexed annuities, also called fixed-indexed or indexed annuities, are hybrid annuity products that are gaining popularity as the new “safe home” for funds formerly stashed in CDs, the stock market and mutual funds.

Equity indexed annuities provide safety nets and minimum interest guarantees in case of market downturns – typically 1-3% interest compounded annually. However, this is just the minimum guarantee; upside earnings potential is much higher. In many cases, upside earnings are capped at a certain percentage, say 8-12% annually.

Equity indexed annuities are tied to an equity index such as the S&P 500, the benchmark for U.S. equity markets. The S&P 500 has been said to represent the health of the overall stock market. As the market goes up, your interest earnings go up as well, because the formula used to determine your yield is based on the percentage change in the index your annuity is tied to. Most importantly, when the stock market goes back down again as it always does, you won’t lose any of your previously credited interest and none of your principal.

When the stock market goes up, interest earnings go up with it, subject to the caps described above. Usually, interest earnings are locked in at each policy anniversary. The basic idea of equity indexed annuities…upside earnings potential without the downside risk.

Need an alternative to your bank savings? Tired of seeing poor returns but afraid of the stock market’s volatility? An equity indexed annuity could be the answer to your concerns. Call the Annuity Specialists at 1-800-998-4056 today to learn more about the safety of equity indexed annuities.