You should ask the following questions about equity-indexed annuities in addition to the questions in the Buyer's Guide to Fixed Deferred Annuities.
How long is the term?
What is the guaranteed minimum interest rate?
What is the participation rate? For how long is the participation rate guaranteed?
Is there a minimum participation rate?
Does my contract have an interest rate cap? What is it?
Does my contract have an interest rate floor? What is it?
Is interest rate averaging used? How does it work?
Is interest compounded during a term?
Is there a margin, spread, or administrative fee? Is that in addition to or instead of a participation rate?
What indexing method is used in my contract?
What are the surrender charges or penalties if I want to end my contract early and take out all of my money?
Can I get a partial withdrawal without paying charges or losing interest? Does my contract have vesting? If so, what is the rate of vesting?
Final Points to Consider
Remember to read your annuity contact carefully when you receive it. Ask you agent or insurance company to explain anything you don't understand. If you have a specific complaint or can't get answers you need from the agent or company, contact you state insurance department.
Annuities
