Equity-indexed annuities are similar to both fixed and variable life annuities because they promise a fixed rate of return plus a rate linked to a stock market index, such as the Standard and Poor's 500. They are less volatile than a typical variable annuity but are able to benefit from a bull market, which a fixed annuity cannot. Be sure to read the fine print in the annuity prospectus, however. Many equity-indexed annuities cap the amount of growth available through the equity indexing feature.
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