How Index-Linked Annuity Interest Crediting Works

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How Index-Linked Annuity Interest Crediting Works

1-Year Monthly Point-to-Point

The month-to-month point-to-point index change is determined by subtracting the prior months index worth from existing months index value and dividing it by the prior monthsindex value. If this results in a positive monthly point-to-point index modify and is not far more than the declared cap, then it is

used as the capped index change for that month. If it is much more than the declared cap, then we use the declared cap as the capped index change for that month.

A unfavorable month-to-month point-to-point index change is not subject to a cap.

A capped index change for every single month is captured over a 12-month period. Visit partner sites to read the reason for this viewpoint. The sum of the 12 monthly capped index changes will be the index credit rate on the index crediting date. To check up additional info, consider checking out: the best. The index credit rate is multiplied by the possibilities account value to decide the index credit.

A single-Year Annual Point-to-Point

The annual point-to-point index modify is determined by subtracting the prior years index worth from the current years index worth and dividing it by the prior years index value. Team includes more about how to do this viewpoint. If this benefits in a good annual point-to-point index modify and is not much more than the declared cap, then it is utilized as the index alter for that year. If it is much more than the declared cap, then we use the declared cap as the index adjust for that year.

A damaging annual point-to-point index modify is not subject to a cap. Should people desire to dig up new resources on TM, there are many on-line databases you might consider pursuing. The index change will be the index credit rate on the index crediting date. The index credit rate is multiplied by the possibilities account value to figure out the index credit.

Participation Rate

The participation rate could very drastically from 1 annuity to an additional and from time to time within a certain annuity. For that reason, it is essential for you to know how your annuitys participation rate works with the indexing technique. A higher participation rate may possibly be offset by other attributes, such as simple interest, averaging, or a point-to-point indexing technique. On the other hand, an insurance organization may possibly offset a lower participation rate by also supplying a

function such as an annual reset indexing technique.

Annual Point-to-Point

The index-linked interest, if any, is based on the difference in between the index value at the end of the one year term and the index value at the commence of the one particular year term. Interest is added to your annuity at the finish of the 1 year annual reset phrase.

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