How much are equity index annuity fees?

Fees for an equity index annuity can be slightly harder to determine than other types of annuities. Chances are the index equity annuity fees will fluctuate on account of how well the equity index annuity does over time.

Generally, equity index annuity fees will come in three general categories:

• Participation Rated Equity Index Annuities- The participation rate determines how much of the yearly index increase will be for your annuity. For example, if the participation rate is 85% and the index increases 10%, the return on your annuity is 8.5% (10% multiplied by 85% = 8.5% return).

• Interest Rate Capped Index Annuity- This means your annuity has a ceiling on how much it can earn per year. For example, the index tied to your interest rate capped index annuity goes up 10%, but your annuity has a cap of 8%. Therefore you make 8% return on your annuity that year
• A Spread Fee Equity Index Annuity- In this equity index annuity fee, the insurance company will take a set amount as a fee every year. For example, your spread free equity index annuity has a 2% annual fee and your annuity made the same 10% this year. You would therefore retain 8% (10%-2%).

Therefore, you can see your equity index annuity fees will vary according to what type of annuity you choose. These fees will add up to quite a bit of money over time, so you should consider all your options carefully.

Equity index annuities are long-term retirement investment vehicles and should not be chosen in haste and may not be right for everyone. Please, take the time to get a few quotes on current annuity rates and then sit down with your accountant or financial advisor to find out which options best suit you.

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