Equity Indexed Annuities (EIAs) are often referred to as providing “sleep insurance” in that an EIA owner can sleep soundly on account of the principal protection it offers.
For the millions of investors who lost small or large fortunes in the market, the idea of never losing money has a lot of appeal. The recent market meltdown and continued market volatility have caused many to see that principal protection is extremely attractive in an environment where the broader market is losing huge percentages of its value.
An EIA will not often provide the highest return over a given period. It isn’t designed to do that. Instead, an EIA will provide a reasonable rate of return and principal protection.
Even though EIAs will compare very favorably with market products in difficult market environments — sure and steady can win the race — EIAs plans were designed simply to provide balance, balance between potential (reasonable, market linked returns) and protection (the safety of principal)
For a better understanding please take a moment and watch the two video’s.