Definition
Equity indexed annuity is a legacy term for what is now called a fixed indexed annuity — an annuity crediting interest linked to a market index through insurer-set parameters, with principal not exposed to index loss.
Why it matters
The term equity indexed annuity predates the current fixed indexed annuity terminology and still appears in older materials and search behavior.
How it works
An equity indexed annuity operates as a fixed indexed annuity: credited interest is linked to a reference index through cap rates, participation rates, and spreads the insurer sets, with crediting floored so that principal is not reduced by index declines. The "equity indexed" label fell out of regulatory and industry favor in part because it implied direct equity participation that the arrangement does not provide; "fixed indexed annuity" is the current term for the same structure.
In practice
If you encounter the term equity indexed annuity, read it as a fixed indexed annuity. The same questions apply: which crediting parameters the insurer can renew, on what schedule, and what the arrangement would credit under named index scenarios at the minimum guaranteed parameters.
In the Longevity Standard Framework
Equity indexed annuity denotes the same arrangement as the fixed indexed annuity and carries the same claims-lens characterization: risk sharing — transferred; adjustment mechanism — discretionary; liquidity — conditional; cost structure — crediting parameter drag. Its structural reading lives in the fixed indexed annuity claim profile.
Related terms
- Fixed indexed annuity
- Indexed annuity
- Fixed indexed annuity claim profile
- Crediting parameter drag
- Cap rate
- Participation rate