Monthly Point-to-Point for One Year
The monthly point-to-point index change is found by taking the index value from the previous month and taking the index value from the current month and dividing it by the index value from the previous month. If this causes a positive monthly point-to-point index change that isn't more than the declared cap, then it is
used as the month's capped index change. If it's more than the declared cap, we use the declared cap as the capped index change for that month.
There is no limit on how much the index can go down from one month to the next.
Over the course of a year, each month has a "capped index change." The index credit rate on the index crediting date will be equal to the sum of the "capped index changes" for the last 12 months. The index credit is equal to the account value of the option times the index credit rate.
Annual Point-to-Point for One Year
The annual point-to-point index change is found by taking the index value from last year and taking the index value from this year and dividing it by the index value from last year. If this leads to an annual point-to-point index change that is positive and doesn't go over the declared cap, it is used as the index change for that year. If it's more than the declared cap, we use the declared cap as the index change for that year.
A cap can't be put on an annual point-to-point index change that goes down. On the index crediting date, the index change will be the index credit rate. The index credit is equal to the account value of the option times the index credit rate.
Participation Rate
The participation rate can be very different from one annuity to the next, and it can also change from time to time within the same annuity. So, you need to know how the indexing method affects the participation rate of your annuity. A high participation rate may be offset by other features, such as simple interest, averaging, or a point-to-point indexing method. On the other hand, an insurance company may be able to make up for a lower rate of participation by also
feature like a way to reset the index every year.
Point-to-Point Annual
The index-linked interest, if any, is based on the difference between the index value at the end of the one-year term and the index value at the beginning of the one-year term. At the end of the one-year annual reset term, interest is added to your annuity.
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