Indexed Life Crediting Methods
Averaging Crediting Methods
- Monthly point-to-point- perform a point-to-point calculation on a monthly basis; add the sum of all months subject to an upside cap, but no downside cap.
- Monthly averaging- measures the index on the day premiums go in (Point A), and keeps track of the index on the next 12 monthiversaries; these 12 values are then averaged and this value is then used as Point B for our point-to-point calculation.
- Monthly averaging with multiple indices- same as above, but calculation is performed for numerous indices, and different weighting is given to different index, i.e. 50% credit given to best-performing index, 30% to next-best, and 20% to worstperforming index.
- Daily averaging- measures the index on the day premiums go in (Point A), and keeps track of the index on a daily basis (each day the market is open) for the next 12 months; these values are then averaged and this value is then used as Point B for our point-to-point calculation.
