How Index-Linked Annuity Interest Crediting Works

One-Year Monthly Point-to-Point The monthly point-to-point index change is determined by subtracting, annuity buyers , the index value from the previous month the index of the current month, divided by the index value and the previous month value. If this results in a positive, annuity buyers , monthly non point-to-point index change is greater than the specified cap, it is used as the capped index change for that Mon If it is more than the specified cap, we can use the cap as indicated capped index change for that Mon A negative monthly point-to-point index change is not subject to, annuity buyers , a cap. A "capped index change" for each month captured over a period of 12 months. The sum of 12 monthly "capped index changes", the index credit rate on, annuity buyers , the index crediting date. The index credit rate is multiplied by the option to determine, annuity buyers , the value of the index, annuity buyers , credit. One-Year Annual Point-to-Point annual point-to-point index change is determined by subtracting the index of the previous years the value of the index of the current year and the value divided by the index of the previous annual value. If this results in a positive, annuity buyers , annual non point-to-point index change is greater than the specified cap, it is used as the index change for that year. If it is more than the specified cap, we can use the cap as shown to alter the index for that year. A negative annual point-to-point index change is not subject to a cap. The change index is the index credit rate on the index crediting date. The index credit rate is multiplied, annuity buyers , by the option to determine the value of the index credit. The participation, annuity buyers , rate can greatly benefit from one to another and, annuity buyers , from time to time within a particular annuity. Therefore, annuity buyers , it is important for, annuity buyers , you to know how the participation rate of your annuity's works with the indexing method. High rates can be offset by other features, including simple interest, averaging, or a point-to-point indexing method. On the other hand, an insurance company offset a lower participation rate by also offering a feature such as an annual reset indexing method. You can Fri reprint this article provided the author bio, and live links are left intact. Jeff McLeod is a fixed index-linked retirement income annuity specialist. For a copy of the manual of the Buyer Visit, annuity buyers , http://happyretiree.com/ http://HappyRetiree.com/