Financial Planning AnnuitiesWhat Is an Equity Index Annuity

This is financial planner Patrick Munro talking
about what is an equity index annuity. Actually an equity index annuity is an annuity that
allows you to participate in the power of the stock market but meanwhile have the benefits
of a fixed annuity. Equity index annuities participate in indexes such as the most common
S and P 500 index. Many people have heard about the S and P.

Inside here are blue chip
companies that you'll recognize. IBM, Caterpillar. Blue chip American companies. And what happens
with an equity index annuity is that you're allowed to participate in market ups but not
the downs which is very key when it comes to preservation of your principle.

Your retirement
principle. It gives you a better rate of return than a certificate of deposit or a fixed annuity
and normally there's a cap on how much you can make in the market. That's the limitation.
However the cap is normally very generous. Set by the insurance company that has attractive
rates.

A word of caution. You have to work with an insurance professional that's very
much licensed to work with this hybrid product. Equity index annuities. This is Patrick Munro,
financial planner..