Indexed Annuities (also known as Equity-Indexed Annuities) offer consumers what could be described as the best of both worlds – a market-driven investment with potentially attractive returns, plus a guaranteed minimum return. Understanding indexed annuities can be difficult because they're all so different. Or as an actuary famously put it, "If you've seen one equity-indexed annuity, you've seen one!"

In general, though, indexed annuities are fixed annuity contracts, either immediate or deferred, which earn interest or provide benefits linked to the value of an equity index. One commonly used equity index is the Standard & Poor's 500 Composite Stock Price Index (the S&P 500), which is widely regarded as the standard for broad market performance. The value of any index is unpredictable, however, and may change daily. Equity-indexed annuity buyers own an insurance contract; they are not buying stock or index funds.

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