1-Year Point-to-Point with Participation Rate 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. With this method, 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.
1-Year Point-to-Point with 2% Spread and Participation Rate 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. With this method, your index credit is calculated using a participation rate along with the deduction of a spread. With the participation rate of 110%, your account would be credited with 110% of the 10% change in the index, less the 2% spread. This amounts to 9%. Your new account balance on your first contract anniversary is $109,000.
$107,500
$109,000
$100,000
$100,000
12.0%
12.0%
10.0%
10.0%
8.0%
8.0%
6.0%
6.0%
4.0%
4.0%
2.0%
2.0%
0.0%
0.0%
0
1
0
1
Contract anniversary
Contract anniversary
Index performance Declared Index Participation Rate
Index performance Declared Index Participation Rate
75% 10% 7.5%
110%
Index growth Interest applied
Index growth
10%
Interest applied (10%*110%)-2%
9%
Index Credit
$7,500
Index Credit
$9,000
Ending account value
$107,500
Ending account value
$109,000
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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