Equity indexed annunities have only one positive selling point. You will never lose all your money in them because they have a floor or minimum return guarantee, even if the benchmark they are indexed to loses money, the insurer will eat the loss and make sure the annity stays level, so there is no net loss.

The tradeoff is that there is a fixed ceiling above which you cannot earn more than, so if the market is really hot and you could have made a ton of money on a big upswing…..you are locked into a ceiling and you make that ceiling and the insurer keeps the rest. Which means you are locked out of big gains.

Because of this EIAs are not generally a good deal for consumers unless you are willing to give up potentially huge gains in exchange for the comfort of knowing you will never go into the negative, like you would in a stock account, etc.

That being said, within any investment group some accounts are better than others. I am aware of equity-indexed annuity accounts with long surrender periods and low caps on the amount you might earn. That is to say… not all annuities are created equal.

You also want to understand that eia’s have fees, you just don’t see them. They come in the form of spreads. The higher the spread and lower the cap – the less you might earn. It is important to shop around some.

I have written extensively about eia’s, feel free to learn a little more here:

http://www.ohioinsureplan.com/annuities/equity_indexed_annuity.php

http://www.ohioinsureplan.com/charts/