2. Monthly sum cap method This method is similar to the point-point-point method, but is based on the monthly index change, with a cap for that month. The 12 monthly changes, including negative percentages, are totaled at the end of every year to determine the interest credit.
You can change strategies Which index strategy you choose is up to you. No one can predict how the market will perform — and just because a strategy performed a certain way in the past, doesn’t mean it will perform that way in the future. You can also pick more than one strategy. However, remember that diversification does not assure a better return. You can change index strategies at the end of each crediting period.
Monthly Sum Cap
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG SEP OCT NOV DEC
1.25 1.25
1
1.25
.5 1.25 1.25
1.25
0
-1
-1
-3
Assumes a monthly cap of 1.25%. The sum of the 12 monthly changes equals 4%, which is the interest credited at the end of year 1.
Hypothetical example for illustration purposes only – this does not represent the actual results of the product.
Spread your premium over 12 months You may worry about getting an annuity at just the wrong time — for example, right before a steep market downturn. You can’t time the market, but one thing you can do is to spread your premium over 12 months, using Dollar Cost Averaging (DCA). If you choose to allocate all of your premium to a DCA account, 1/12th of your premium is moved into the index strategy of your choice each month, receiving that month’s rate for a 1- or 2-year period. You can also choose to allocate only a portion of your premium to a DCA account (with a minimum of $5,000), and every month, you have the option to move all remaining premium into an index strategy of your choice.
Spreading out your premium over a 12-month period helps capitalize on more potential interest rate crediting dates and reduces risk associated with one annual crediting anniversary. However, Dollar Cost Averaging does not guarantee an advantage over not using DCA. Until allocated into a monthly crediting strategy, premiums will earn interest in a fixed interest crediting account.
TC139026(0124)3
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