1-Year Point-to-Point with Participation Rate
Protection during periods of negative performance
Example: Your account has a value of $100,000. The index increases from a value of 1,000 to 1,100 from issue of your contract to your first anniversary — a 10% change in the index. In this account, your Index Credit is calculated using a Participation Rate. With the Participation Rate of 75%, your account would be credited with 75% of that 10%, amounting to 7.5% . Your new account balance on your first contract anniversary is $107,500.
Example: Your account has a value of $100,000. The index decreases from a value of 1,000 to 950 from contract issue to your first contract anniversary — a 5% decline. Because the index experiences negative performance, you won’t earn any interest for the first contract year, but you don’t lose any money either. This applies to all crediting methods, whether using a Cap or a Participation Rate.
$100,000
$100,000
4.0%
$107,500
3.0%
$100,000
Cap
2.0%
12.0%
1.0%
10.0%
0.0%
8.0%
-1.0%
-2.0%
6.0%
-3.0%
4.0%
-4.0%
2.0%
-5.0%
-6.0%
0.0%
0
1
0
1
Contract anniversary
Contract anniversary
Index performance Declared Index Participation Rate 75% Index growth 10% Interest applied 7.5% Index Credit $7,500 Ending account value $107,500
Index performance Declared Index Cap
2%
Index growth Interest applied
-5%
0% $0
Index Credit
Ending account value
$100,000
These are hypothetical examples for illustrative purposes only. They are not indicative of any particular time period or guarantee of future performance.
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