Working hand in hand with the floor to protect you from losses are two very important features of these policies:

Annual Lock in of Interest Gains
and Annual Reset

Annual Lock in of Gains

Every year you will receive a simple annual statement.� This will show the interest credited into your policy based on the performance of one of the market indexng crediting strategies offered by the insurance company. ( These strategies may use indexes like the S&P 500, Nasdaq 100, FTSE 100 etc.)

Any interest you receive now Locks In and becomes part of your principal. They are now part of your policy and cannot be lost in future years due to market downturns. You automatically get to keep the interest from the up years and take none of the losses from the down years. This is very important because what good are short term yields if you are only going to lose them long term?

Here’s an example:� One of our clients recently had an interest credit of 9.69% from April 2006-April 2007.� The interest  now Locks In. Next, from April 2007-April 2008 the index dropped nearly 8%.� So instead of wiping out the interest they earned from the previous years, they didn’t take any losses, kept the interest from the previous years, and took a zero for that year.

Annual Reset – one of the most important aspects of this strategy!

In the previous example our client took a 0% interest for the 2007-2008 period instead of the actual 8% market loss. Now their Index Position automatically resets to the low point.� So, in 2007 their index starting value was 1437.77.� Their ending value in 2008 was 1369.31.� This becomes their new starting point with the indexing crediting strategy the insurance company offers and they are automatically positioned to gain interest if the market rebounds.  This works because none of your funds are ever invested in the market.

In a traditional investment like stocks or mutual funds, you have a long way to go just to get back to even. Here’s a hypothetical example: You bought a stock at $100 per share and then it dropped to $80 per share. You are not making any money until you get back to the $100 per share price you started at. You need a 25% increase just to get back to even.

But in the equity index annuity you don’t have to make up any ground. In this hypothetical example, you would “Reset” to the low value at $80 per share on your annivesary and be able to capture interest on the way back up.� You are automatically positioned to take advantage of a market rebound and any interest you gain in the future are actual gains.