Index Annuity

Published: | Updated: June 30, 2017

Definition - What does Index Annuity mean?

An index annuity is an annuity that is tied to an equity index such as the S&P 500. These types of annuities offer annuitants the opportunity to increase their returns if their index performs well. Many insurance companies offer index annuities to their customers.

Insuranceopedia explains Index Annuity

Index annuities can be subject to the performance of the stock market. This can give the impression that they are considerably riskier than other types of annuities. However, many index annuities come with protections against stock market declines, which can help mitigate the risk for annuitants. Index annuities are often a good option for people who are interested in a certain index and who are looking to earn more money from their annuities.

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