Annual Point-to-Point Example
[Ending Index Value (1,100) – Beginning Index Value (1,000)]
Beginning Index Value (1,000)
= .10 x 70% Participation Rate = 7% Interest Earned
Monthly Point-to-Point Example
Month 1:
[Ending Index Value (1,050) – Beginning Index Value (1,000)]
Beginning Index Value (1,000)
= 5% Growth recorded for the month,
but 3% cap applied (cumulative 3%)
Month 2:
[Ending Index Value (1,150) – Beginning Index Value (1,050)]
Beginning Index Value (1,050)
= 9.52% Growth recorded for the month,
but 3% cap applied (cumulative 6%)
Month 3:
[Ending Index Value (900) – Beginning Index Value (1,150)]
Beginning Index Value (1,150)
= -21.73% Growth recorded for the month,
and no cap is applied (cumulative -15.73%)
Month 4:
[Ending Index Value (1,000) – Beginning Index Value (900)]
Beginning Index Value (900)
= 10% Growth recorded for the month,
but 3% cap applied (cumulative -12.73%)
Month 5:
[Ending Index Value (1,100) – Beginning Index Value (1,000)]
Beginning Index Value (1,000)
= 10% Growth recorded for the month,
but 3% cap applied (cumulative -9.73%)
Month 6:
[Ending Index Value (1,400) – Beginning Index Value (1,100)]
Beginning Index Value (1,100)
= 27.27% Growth recorded for the month,
but 3% cap applied (cumulative -6.73%)
Month 7:
[Ending Index Value (1,350) – Beginning Index Value (1,400)]
Beginning Index Value (1,400)
= -3.57% Growth recorded for the month,
and no cap is applied (cumulative -10.30%)
Month 8:
[Ending Index Value (1,450) – Beginning Index Value (1,350)]
Beginning Index Value (1,350)
= 7.40% Growth recorded for the month,
but 3% cap applied (cumulative -7.30%)
Month 9:
[Ending Index Value (1,600) – Beginning Index Value (1,450)]
Beginning Index Value (1,450)
= 10.34% Growth recorded for the month,
but 3% cap applied (cumulative -4.30%)
Month 10:
[Ending Index Value (1,650) – Beginning Index Value (1,600)]
Beginning Index Value (1,600)
= 3.12% Growth recorded for the month,
but 3% cap applied (cumulative -1.30%)
Month 11:
[Ending Index Value (1,700) – Beginning Index Value (1,650)]
Beginning Index Value (1,650)
= 3.03% Growth recorded for the month,
but 3% cap applied (cumulative 1.70%)
Month 12:
[Ending Index Value (1,800) – Beginning Index Value (1,700)]
Beginning Index Value (1,700)
= 5.88% Growth recorded for the month,
but 3% cap applied (cumulative 4.70%)
At end of 12-month period, cumulative result is positive gain of 4.70% credited to policy
Monthly Averaging Example
Beginning Index Value (1,000) –Point A |
|||
| Value Month 1 | (1,020) | ||
| Value Month 2 | (1,030) | ||
| Value Month 3 | (1,050) | ||
| Value Month 4 | (1,070) | ||
| Value Month 5 | (1,040) | ||
| Value Month 6 | (1,060) | ||
| Value Month 7 | (1,090) | ||
| Value Month 8 | (1,120) | ||
| Value Month 9 | (1,110) | ||
| Value Month 10 | (1,080) | ||
| Value Month 11 | (1,070) | ||
| Value Month 12 | (1,100) | ||
Average of 12 Monthly Values (1,070) – Point B |
|||
[Average Index Value (1,070) – Beginning Index Value (1,000)]
Beginning Index Value (1,000)
= .07 x 100% Participation Rate = 7% Interest Earned
