EQUITY INDEXED ANNUITIES - CH 11

List 4 EIA Indexing Methods

( 1 ) Annual Reset ( 2 ) High-Water Mark ( 3 ) Point - To - Point ( 4 ) Index Averaging

EIA - Characteristics of Return

( 1 ) Guaranteed MINIMUM ROR ( 2 ) Variable return bases on Index Performance

1035 Exchanges allow for 3 Exchanges WITHOUT?

(1) NQ Annuity → Qualified Annuity (2) Life Insur. Policy → NQ Annuity (3) Life Insur. Policy → Another LI Policy

POINT TO POINT - Index Method ( 1 ) Calculation ( 2 ) Advantage

- Compares @ 2 points - Can be combined with Higher Caps/Participation Rates

EIA's are NOT Suitable for which Investors?

- Short Term - Older

ANNUAL RESET - Index Method ( 1 ) Calculation ( 2 ) Advantage

ANNUAL RESET ( 1 ) Amount Index increased from Beginning of Yr to End of Yr ( 2 ) Gains LOCKED in / Decreases ignored

HIGH WATER - Index Method ( 1 ) Calculation ( 2 ) Advantage

CALCULATION: - How index performed at various points - Uses 3 highest values to calculate ROR ADVANTAGE: - May give Higher Returns - Protection against declines

EIA Returns - Spread / Margin / Asset Fee

Specified percentage is subtracted from the Index Gains Return = Index Gain - Spread