To be upfront here, it is clear that point to point remains a term used on fixed indexed annuity crediting strategy. It is important to know that indexed annuities often credit a level of interest to contract owners. In most cases, the level or status of credited interest can be based on the function of equity markets. It can as well be linked to performance of equity market operations. Nevertheless, point to point can also reflects the level of credited interest with respect to a percentage of the difference in an indexed value over a given period. For instance, you can take the S&P 500 index to be 900 at the beginning of the year 2013. If at the end of 2013, the index increases to 1,000. You will discover that the difference between the two instances remain 100 points. You can as well call it 10 percent of the commencing index figure. On this note, it is clear that the contract owner will be credited a level of interest that stands out. In fact, the contract owner will be credited with respect to an interest cap. Interest owners can as well be credited with respect to participation rate. This is basically a 10 percent of the starting fee. Are you looking for tips on understanding the point to point index annuity strategy? With the simple illustration below, you are sure to discover tips on understanding the point to point index annuity strategy easily.
One Year Point To Point Index Strategy
The one year point to point index strategy often credits interest to owner’s annuity for just once. This is basically done once in a year. Nevertheless, you are sure to discover that the strategy is with respect to the change in S&P 500 index figure. This is often practiced or done each year using the point to point calculation technique. It is sure that the point to point calculation will take the figure of the S&P 500 index at the start of the year. It will also take reading at the end of each contract year. The two figures are compared to get a reasonable percentage change in the same period. On this note, the percentage change in the index is equivalent to the interest credited to your annuity. It is important to know that the point to point performance applied in calculating your interest may be different to other options. In most case you will find a change when compared to the option called published annual index performance. It is clear that your interest will be calculated based on the annuity’s contract year. This is simply the date you bought the contract. It is also opposed to a calendar year. At this juncture, it is important to know that interest credits for any contract year can be zero or positive. In the years when the index does well, there is every possibility to partake in a part of the upward performance. When the market is sunning down, there is every possibility to have zero interest placed on your annuity for the same contract year.