Abstract
Equity index annuity features vary in several ways, especially in the guarantee of the participation rate, margin (spread), and/or maximum cap rate during the index period. Since insurers can provide these guarantees in many ways, marketers need to understand the differences, how to explain them, and how to set expectations for clients about them. They should also understand the underlying investment aspects of how insurers hedge the different methods. In the end, the highest first-year rate is not necessarily going to provide the best overall value for the client. Rates that are guaranteed for the entire period usually wind up being higher than renewal rates that are declared annually. While some EIAs have first-year rates that may look higher than guaranteed rate products, the minimum renewal levels allowed contractually should be known. Renewal rate histories for that product should also be known to see where the real renewal rates are in the later years.