Crediting methods — how they work
Protection during periods of negative performance
1-Year Point-to-Point with Cap & 1-Year Point-to- Point with Term Guarantee Cap Example: Your account has a value of $100,000 at issue. The index grows from a value of 1,000 to 1,020 from issue of your contract to the first anniversary — a 2% change in the index. Because this amount is below the declared 4% cap, you will be credited the full amount of 2% on your first contract anniversary, and your account value will grow to $102,000.
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.
$102,000
$100,000
$100,000
$100,000
4.0%
4.0%
Cap
3.5%
3.0%
Cap
2.0%
3.0%
1.0%
2.5%
0.0%
2.0%
-1.0%
-2.0%
1.5%
-3.0%
1.0%
-4.0%
0.5%
-5.0%
-6.0%
0.0%
0
1
0
1
Contract anniversary
Contract anniversary
Index performance Declared Index Cap
Index performance Declared Index Cap
4% 2% 2%
2%
Index growth Interest applied
Index growth Interest applied
-5%
0% $0
Index Credit
$2,000
Index Credit
Ending account value
$102,000
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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