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I am considering investing in index annuity. The index annuity guarantees the principal.
Which principal is being guaranteed? The initial principal, or does it reset every few years to the then current principal value?

The first year it guarantees 100% of what the S&P 500 Index averages.
Nice sales tool.

After that it will pay no less than 50%.
Is this with or without reinvested dividends? How do they determine what rate they will pay? I assume this return is before paying for fees.

The minimum guarantee is about 2 1/2% which is said to limit the loss in a falling stock market.
Why do they have to guarantee your principal if they are guaranteeing a minimum return?

The insurance company invests most of the money in this account in government and corporate bonds.
I'd like to see the quality and yield of those corporate bonds. Are they convertible?

Zev
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