Equity Indexed Annuities
This course looks at equity indexed annuities. Designed for agents with five years or more annuity experience, this is an advanced level course. Although newer agents may be able to navigate the course, an experienced agent is more likely to fully understand the EIA concepts. Terminology is very important so that is also examined. Agents must realize that terminology is connected to how the product performs.
Equity Indexed Annuities gives a very brief history of the EIA origins, but primarily looks at how the product performs. Although they are fixed rate annuities, not variable annuities, they are still complex annuity products; both agents and investors could easily misunderstand them without product education.
The course looks at how the policy is put together, payout options and the differences between those payout options. The course also discusses the possibility that a principal loss could occur under some conditions; some of those losses are connected to the interest earning method used.
Many parts of this course should be read multiple times in order to completely understand the product. This is not a course that can be skimmed; it must be completely and thoroughly read for comprehension.
The course looks at the disadvantages of EIAs as well as possible advantages. Like all investments, they are not suitable for all investors. Suitability is discussed at length in several sections of the book since it is of extreme importance. These annuities are complex; certainly more complex than traditional fixed rate annuities. EIAs will not always perform as well as the stock market but they do guarantee principal if funds are left to maturity. The course discusses the long-term nature of these investments and the fact that only excess funds (not currently needed money) should be deposited into them.
This can be a worthwhile long-term investment, but there are risks. We look at those risks in terms of product suitability, long-term goals, and retirement vehicles.