In general terms, annuities allow you to accumulate tax-deferred funds for retirement and then receive a guaranteed income.  This guaranteed income is payable for life or for a specified period of time: generally a term of five or ten years.  Annuities are offered by insurance companies and sold through licensed agents.  Be sure to find a licensed agent to assist you with your annuity questions. 

Some information regarding Equity Indexed Annuities:

1.  Equity Indexed Annuities (EIAs) are structured as a contract return that is the greater of an annual minimum rate (typically 3%) or the turn from a stock market index, such as the Standard & Poor’s 500 index, reduced by certain expenses and formulas.

2.  With an EIA, if the selected index rises sufficiently during a specific period, a greater return is credited to the contract owner’s account for that period.

3.  With an EIA, if the stock market index does not rise sufficiently, or even declines, the lower minimum rate is credited.

4.  Furthermore, an owner is guaranteed to receive back at least all principal, if an EIA contract is held for a minimum period of time.

Find an insurance company and/or licensed agent to help you better understand these variables and determine which type of annuity is best for your financial future and needs.  For example, the fixed-rate annuity is ideal if you want to have the security of a guaranteed interest rate.  However, the variable-rate annuity is preferable if you want to increase your gains as the market potentially grows.