Equity indexed annuities are classified as which type of annuity?

Equity indexed annuities are classified as fixed rate annuities because they provide a guaranteed minimum interest rate, similar to traditional fixed annuities, while also allowing for the potential of higher returns based on the performance of a specified stock market index. This type of annuity combines features of both fixed and variable annuities: it ensures a baseline return while offering the potential to earn additional interest based on market index fluctuations.

The fixed aspect means that the annuity will not lose money in down markets, making it appealing to conservative investors who are looking for stability alongside some growth potential. This distinguishing characteristic aligns equity indexed annuities more closely with fixed rate annuities rather than those classified as variable rate, which can fluctuate widely based on the performance of underlying investments.