Key terms Index Cap Rate: The maximum index rate used in calculating the index credited amounts for a participation account. Minimum index cap varies by index period:
• 1 year capped accounts — 3% cap • 2 year capped accounts — 6% cap
Index Date: Sometimes called a sweep date, is the date on which an index period begins or ends and it will be the 10th or 25th of the month. All funds received prior to an index date will be deposited first to the fixed account then swept into the index accounts on the next index date. If an index date falls on a date on which the New York Stock Exchange is not open for trading or Ameritas Life Insurance Corp isn’t open for business, the index value will be determined using the index value as of preceding business day. Index Floor Rate: Minimum index rate used in calculating index credited amounts for a participation account. Index Period: Time between the beginning index date and ending index date of a participation account. Index Rate: The percentage change in the index value from the beginning date of the index period to the ending date of the index period. The index rate for each participation account cannot exceed the index cap rate declared for the index period. Participation Account: One of the divisions of the account value upon which index credited amounts are based. Participation Rate: The percentage of the index rate credited to the account value. Minimum guaranteed participation rates for uncapped index options are 25%.
Point-to-Point index crediting method
This interest crediting method helps lock in interest rate earnings and maximize the upside growth potential of equity indexes. The company compares the value of the index on the first day of the index period to its value on the last day of the index period to calculate the percentage change. If the index has risen, clients “lock in” gains because policy values will receive an adjustment at the end of the index period resulting from the increase in the index on which their interest crediting method is based. The index value on the last day of that index period is then used as the starting point for the next index period. If the index has fallen below the initial starting point, clients are protected from loss due to the 0% floor in the participation account. The lower index value at the end of that index period becomes the starting point for measuring the annual growth in the index for the next index period, creating potential for growth if the index recovers. Capped participation Funds in a capped participation account receive no interest throughout the index year and an index credit, if applicable, at the end of the index year for each participation bucket. The index credit is calculated for each index bucket based upon a participation rate and a cap declared at the beginning of the index period. With the point-to-point capped method, if the index increases, your client will realize a gain up to a certain maximum point, or cap, multiplied by a participation rate. Uncapped participation Funds in an uncapped participation account receive no interest throughout the index year and an index credit, if applicable, at the end of the index year for each participation bucket. The index credit is calculated for each index bucket based upon a participation rate declared at the beginning of the index period. With the point-to-point uncapped method, if the index increases, your client will realize a percentage gain equal to reference index performance over index period multiplied by the declared participation rate.
For financial professional use only. Not for use with clients.
IUL-AG-0723
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