Carl is concerned that if he purchases an equity indexed annuity, he will lose money long-term if the stock index declines. Which equity indexed annuity provision assures Carl that he will not lose money if he holds the equity indexed annuity to term?

Question

Quizplus · Accepted Answer

The guaranteed minimum value provision assures the policyholder that they will not lose money if they hold the equity indexed annuity to term. This provision guarantees that the policy's value will not fall below a certain amount, even if the stock index on which the annuity is based declines. This helps to protect the policyholder's investment and provides peace of mind for those concerned about losing money in a volatile stock market. The other provisions, such as the indexing method, participation rate, and maximum rate cap, are important factors to consider when purchasing an equity indexed annuity but do not provide the same level of protection as the guaranteed minimum value provision.

Carl Is Concerned That If He Purchases an Equity Indexed