What is an Equity Indexed Annuity (EIA) ?

An equity indexed annuity is a special type of contract between you and an insurance company. EIAs are more complex than fixed annuities, but have some of the same characteristics.  The return on an EIA varies more than that of a fixed annuity.

Once you make a deposit into your EIA, either in a lump sum or a series of payments, the insurance company credits you with a return that is linked to changes in an equity index, such as the S&P 500.

PLEASE NOTE - You are not buying stock or investing directly in any index.

It seems that most people who buy CDs at their local bank buy them for savings and don't think much about it .  This is money that you don't need for day-to-day living expenses. CDs are purchased in terms of 1 year; 3 years; 5 years; or longer and if you surrender them early, there will be penalties.

The same goes with annuities - they are long-term vehicles designed for retirement or other long-term planning.  If you surrender an annuity early, there will be penalties.

Fixed Annuities