Good dayI I would like some feedback on the equity indexed annuity.

Anglis56,
Equity-indexed annuities have been somewhat controversial lately, in most cases simply due to the sheer complexity of the contracts that makes it difficult to evaluate whether they really are a "good deal" or not.

First of all, I think you need to clarify how the retirement income guarantee works. It sounds like you're on the right path in understanding that there are two SEPARATE amounts here - your account balance, which will grow or not based on the equity index formulas, and the so-called "income base" that you can utilize to get income in the future.

What you really need to clarify first and foremost is what that income guarantee will really provide in ACTUAL DOLLARS in the future. In many cases, this phantom income base can only be annuitized - and often, the annuitization itself is at extremely low rates (which is why the company can promise such a high initial rate). Whether that's actually a good amount of guaranteed income or not may vary with the contract. So start by clarifying exactly how much you will get in actual dollars of income in the future under the guarantee, and compare that to what you might get with other alternatives.

Secondly, be careful to evaluate how the equity index formulas work. Ask the insurance agent to show you several different market scenarios (not just the "most favorable" one that companies tend to show by default). In some equity-indexed annuity contracts, you'll find that it's actually hard to earn more than what a CD would pay anyway due to the formulas. In other cases, you'll find that you can reasonable get high enough potential returns to make it worthwhile.

The bottom line is that these can definitely be a little complex. If you don't understand what you're buying, don't buy it. But if you do understand how the crediting formulas work, and how the separate income guarantees work, and you like both features, then it sounds like this may be a reasonable fit for you.

I hope that helps a little!