Then the financial crisis of 2008 hit, upending financial markets and changing the rules.  As a result from ongoing fiscal upheaval, CD rates – already low – have dipped to the point where their value has become negligible to even the most risk-averse of investors. At the same time, the bond market has become volatile and cannot provide the steady, reliable fixed returns it once provided investors.

For investors seeking a better choice, equity indexed annuities and life insurance products can help provide the returns on your savings that you need. These investments provide much of the stability that CDs and bonds offered, but the slightly higher risk involved gives investors a better shot at earning a higher return. For folks looking for a safe bet that has a chance of a decent payout, equity indexed annuities and life insurance are a winner.

What Is An EIA?

Equity indexed annuities, or EIAs, are financial products that are a kind of hybrid of variable and fixed-rate annuities. Their rates have greater risk than fixed rate annuities, but are less risky than a traditional variable rate annuity. Rates are linked to various market indexes like Standard and Poor’s, the Dow Jones, Russell, or a mix of various indexes.

In most cases, the interest you earn through your EIA will be credited on a yearly basis. Should the index dip over the year, you won’t earn any interest, but you won’t lose your capital, either. If the index your EIA is linked to does well, you’ll earn a higher rate of interest than you would have with a fixed return annuity or a CD or bond.

You can purchase an equity indexed annuity from a financial company, or as a part of your life insurance policy. Many investors who use these financial products choose to do so through their life insurance company.Reducing Your TaxOne of the goals of any investor seeking to save for retirement is to keep as much of their money as they can and surrender as little to the government as possible. EIAs provide tax advantages for their investors.If you purchase an equity indexed annuity, the interest you earn on your principal is treated as tax-deferred, meaning your investment won’t be taxed until you withdraw it. When you participate in an equity indexed annuity, your interest will also accumulate tax deferred, and, if managed correctly can be withdrawn tax free.While equity indexed annuities and life insurance products aren’t right for everyone, many investors seeking a good rate of return over the long term can successfully use these investments to provide for their needs.