Tuesday, August 25, 2009
How do indexed annuities compare with indexed certificates of deposit?
Banks are marketing a new type product, the indexed certificate of deposit, and this is making insurance professionals wonder how their own indexed product, the fixed indexed annuity, stacks up.
Indexed CDs link their potential credited interest to the performance of an external market index such as the S&P 500. (This distinguishes them from traditional CDs, which provide a guaranteed stated interest rate each year.)
The value proposition is, indexed CDs offer the potential to exceed traditional fixed interest rates without exposing principal to market risk. In addition, if the market index does not create any interest credits, the indexed CD guarantees that depositors will get their money back as long as they hold the CD to the end of the selected term...
Indexed CDs link their potential credited interest to the performance of an external market index such as the S&P 500. (This distinguishes them from traditional CDs, which provide a guaranteed stated interest rate each year.)
The value proposition is, indexed CDs offer the potential to exceed traditional fixed interest rates without exposing principal to market risk. In addition, if the market index does not create any interest credits, the indexed CD guarantees that depositors will get their money back as long as they hold the CD to the end of the selected term...
National Underwriter (L&H News): How do indexed annuities compare with indexed certificates of deposit?
Permalink posted by markw @ 4:32 AM 
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