Some of you may have heard some noise in the media over the past week about the small dip in ...
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Think Twice Before Buying An Equity Index Annuity
June 6, 2008
The sign in the middle of a shopping mall reads, "Stock Market Returns With NO RISK." As I approached the kiosk, I knew I was looking at the latest ad for an "Equity Index Annuity" or EIA. They're often also referred to as a "Fixed Index Annuity." If you're over 50, you've probably received numerous cryptic invitations to attend a "financial" seminar with a free dinner. More than likely, you're being solicited to buy an EIA.
Typically, these annuities promise guarantees for your principal or even a modest return, while "allowing you to participate in the upside of the stock market." In other words, "you'll receive the gain, without the pain." To understand this claim, which, in my view, is quite misleading, you need to know how these products work, what you actually own and exactly what "participate in the upside" really means.
From Tim Bastian's op/ed on Forbes.com.
