The Best Equity Indexed Annuities

By Rosella Campbell


Unlike other products available at the market, investors prefer those attracting maximum returns relative to the risk exposure. For that reason, best equity indexed annuities allow one to earn potential gains in appreciating stock market while providing a shield eliminating penalties when it declines. They offer a platform to gain higher returns while simultaneously eliminating exposure of principal to potential market risk.

The policyholders of these annuities obtain a desirable trade-off between the portion of gains ceded and the guaranteed protection against risk exposure. However, spotting the best contractual terms is an ideal strike that the investor should attempt especially those preferring minimal exposure to market volatility. This forms the foundation of attracting conservative investors comprising both retired and individuals posed to retire soon. Owing to the reduced risk exposure, this proves a disciplined approach to invest and overcome the market risk.

The desirability of the contractual terms mandates performing a comprehensive analysis of the terms prior to forming an opinion on the best annuities. The contractual terms of the best products locates their foundation from the participation rate and minimum rate guaranteed on crash years. Equally, knowing the amount charged as administration fees and calculation platform serves an informative role to investors.

Initial evaluation of the participation rate proves a turning point upon which the investors determines the anticipated yield in maturity. This presents the growth that an investor will realize during the positive period. Consequently, higher rates transpire to greater returns to investor. Considering that the small variations determine the forthcoming returns, embracing higher rates should remain the priority.

Investors should embrace a product featuring a higher minimum rate receivable during the poor-performance period. This rate serves as a protection for the investors against incurring catastrophic losses while generating moderate growth. One should seek the contract stipulating the highest rate amongst the products on offer to secure the maximum earnings during crash.

Capping allows the insurance companies limit the earnings that one may realize during the extraordinary years. While avoiding such caps leaves the investor at a positive platform of realizing the entire gains, one should desire products least eroding their baselines. Subsequently, attempt to extract more earnings constitute offsetting the caps through higher participation rates.

While there exist varying credit methods applicable during the determination of the annual returns, spotting those employing the favorable criterion helps realize more returns. Despite the inherent benefits posed by the high water-mark and point-to-point calculations, the annual reset locks the previous account from declining in subsequent years.

Fixed and varying annuities warrant a high liquidity platform for the investor than the indexed products. This obligates investors to commit to soft vesting schedules to gather maximum returns over the period. Administration fees charged to the principal reduces the principal given the annual deduction nature applied over time. Investors finding products exclusive of these fees avoid the counterproductive phase imposed on their earning platform. Conclusively, investors should find contracts where they derive greater yields by avoiding limiting terms.




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