What are equity-indexed annuities?

A fixed indexed annuity (FIA) is often called equity-index annuity, either immediate or deferred, that earns interest or provides benefits that are linked to an external equity reference or an equity index. The value of the index might be tied to a stock or other equity index. One of the most commonly used indices is Standard Poor's 500 Composite Stock Price Index (the SP 500). Historically, FIAs earned a higher investment return versus that from a fixed-rate annuity (e.g. MYGA).","example":"\Example: Initial Premium: $50,000 Interest credit calculated based on the SP 500 index with a simple formula: 6% or $3000 (50K x 6% = 3000) So, Account Value grows to $53,000 Income/Benefit Base grows with a fixed rate, or by the interest credit with a Multiplier: Interest: $3000 Multiplier: 150% Benefit Base growth: $4500 (3000 x 150%) New Benefit Base: $54,500