Question

2. An equity-indexed annuity and a variable annuity are both similar and different in many respects.

a. Explain the major similarities between an equity-indexed annuity and a variable annuity.

b. Identify the major differences between an equity-indexed annuity and a variable annuity.

Answer 1

ANSWER:

An equity-indexed annuity and a variable annuity are both similar and different in many respects as follows:

• A value recorded annuity is an intricate strategy for annuity installment with higher loan cost yield in contrast with customary fixed annuity installments.
• As the name proposes the intrigue yield in annuity installment relies upon the presentation of value file, for the most part, S&P 5000.
• For the most part, such annuity comes in the middle of conventional and variable rate annuity installment.

a) The major similarities between an equity-indexed annuity and a variable annuity are:

• The significant similarities between a value recorded annuity and a variable annuity are variety in financing cost of annuity installment.
• The annuity sum might be scattered in the type of standard pay of one-time singular amount installment.

b) The major differences between an equity-indexed annuity and a variable annuity are:

• As the significant contrast between a value listed annuity and a variable annuity are the choice of successful financing cost on annuity installment.
• In value ordered annuity, the rate rely upon execution of record and investment proportion.
• For instance, an insurance agency offers 90% value file annuity with the S&P 500, it implies a speculator will get 90% of absolute to come back from the file. In factor annuity, the rate will change straightforwardly with a predefined advertising rate.