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Posted by chenkejian chenkejian on Monday, June 4, 2012
If you need more than just a small portion of your money before then you will have to pay enormous surrender penalties that can be as high as 12%. You can lose principal because of these penalties EIAs are not regulated by the SEC or the NASD and any guarantees are only backed by the strength of the issuing insurance company.
Most EIAs will put a ceiling on how much you can earn, no matter how much the stock market goes up But that doesnt mean you can earn the maximum amount because Many EIAs have an asset fee that is subtracted from the ceiling.A 2% asset fee is common With a 10% ceiling and a 2% asset fee, you can never earn greater than 8% in any one year The insurance company determines the method of calculating the return.
The result is that you lose control and could end up earning far less then the market index You may not earn guaranteed rate on the full amount you invest Some only pay the guaranteed rate on 90% of your original investment and then only if you stay in for the entire 7, 10, or 12 years.
History also tells us that EIAs are not a very good investment When you run the numbers, there are no tenyear time periods since 1975 where an EIA would have outperformed the S&P 500 index Plus, you could access your money in an index fund any time you wanted without the automatic surrender penalties imposed by EIAs.
Most EIAs will put a ceiling on how much you can earn, no matter how much the stock market goes up But that doesnt mean you can earn the maximum amount because Many EIAs have an asset fee that is subtracted from the ceiling.A 2% asset fee is common With a 10% ceiling and a 2% asset fee, you can never earn greater than 8% in any one year The insurance company determines the method of calculating the return.
The result is that you lose control and could end up earning far less then the market index You may not earn guaranteed rate on the full amount you invest Some only pay the guaranteed rate on 90% of your original investment and then only if you stay in for the entire 7, 10, or 12 years.
History also tells us that EIAs are not a very good investment When you run the numbers, there are no tenyear time periods since 1975 where an EIA would have outperformed the S&P 500 index Plus, you could access your money in an index fund any time you wanted without the automatic surrender penalties imposed by EIAs.