How Are Annuities Funded?
61667 POINTSview profileSteve SavantSyndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale ArizonaTax deferred annuities have three basic crediting methods: interest rate crediting, index crediting and separate sub account crediting or debiting depending on market performance. Fixed interest rate crediting is funded by the company's portfolio returns. Indexed annuities are funded primary from the performance or non performance of index options. And separate sub accounts are invested in equities and bond instruments.Answered on August 14, 2013flag this answer
37376 POINTSview profileDavid G. Pipes, CLU®, RICP®Business Development Officer, T.D. McNeil Insurance Services, Fresno, CaliforniaDuring the accumulation phase an annuity works much like a bank account. The funding comes from the deposits that the owner of the annuity makes to the plan. The company pays interest on the money that it holds. Since compound interest is so powerful company interest payments can become a major contributor to an annuity.Answered on June 10, 2014flag this answer
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