What Are Equity-Indexed Annuities?

By Lyle Daly – Updated Apr 3, 2025 at 12:52 PM

Key Points

Equity-indexed annuities link interest to stock indexes but have a guaranteed minimum return.
Returns have contractual limitations and don't include dividends, reducing overall gains.
Before investing, review contract fees, rate of return limits, and early withdrawal penalties.

Equity-indexed annuities have interest rates linked to the stock market while also providing downside protection. While they often appeal to conservative investors, they're complicated financial products, and they also have some notable drawbacks.

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Getty - annuity protection income-1200x800-5b2df79 — Image source: Getty Images.

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About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

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