According to Matthew Sturdevant of The Hartford Courant, “Indexed Annuities (are) a Perfect Investment During (the) Recession.” His interview with Dana Pederson of Phoenix Cos. explains why equity indexed annuities are so important for investors and so popular right now. An indexed annuity is almost like a hybid of a fixed annuity and a variable annuity. Since your investment is linked to an equity index, you have the potential to earn money if there is a gain in your index. But unlike variable annuities, there is no risk of losing money because insurance companies hedge the risk of your investment and while you may not make any money, you definitely won’t lose any.
With record sales of equity indexed annuities in 2009, 2010 has the potential of beating even those sales figures. Driving the sales are the fact that investors have had time to learn about these safer investments as well as the burning desire to actually invest in a safer product after the past two years of market turmoil. The guaranteed income riders attached to these annuities are also helping to increase their popularity. Most equity indexed annuities are purchased with a lump sum and must be held for at least ten years. While they are set up to deplete by paying you guaranteed income for either your lifetime or as long as the value remains, death benefits for a beneficiary are available if the investor passes away with a remaining account balance.