Glossary

Crediting parameter drag, in the cost-structure sense, is the cost-structure value that applies to lifetime income arrangements where the insurer's cost is imposed through manipulation of cap rates, participation rates, and spread parameters that determine how much of the underlying index return is credited to the contract. Why it matters Fixed indexed annuities link contract crediting to the performance of an external index — typically a broad equity index — but the credited retu

A crediting spread is a fixed percentage subtracted from an underlying index's measured gain before the remaining amount is credited to an indexed annuity contract over a specified crediting period. Why it matters The crediting spread is the third primary parameter — alongside the participation rate and the cap rate — through which an indexed annuity charges for the structure it provides. Where the participation rate operates as a multiplier and the cap rate operates as a ceiling,

Daily averaging is an indexed annuity calculation method that takes the daily closing values of an underlying index across a crediting period, averages them, and uses the percentage change between the starting value and the period average as the basis for the credit applied to the contract. Why it matters Daily averaging is the calculation method that smooths most aggressively over the path of the index — by replacing the period-end value with an average of all daily values during

The death benefit of an annuity contract is the amount payable to a named beneficiary upon the death of the contract owner (or, in some product structures, the annuitant), with the specific calculation determined by the contract's product type, any enhanced-death-benefit rider, and whether the contract is in the accumulation phase or has been annuitized. Why it matters The death benefit is the principal feature through which an annuity contract addresses what happens to the contra

A declared rate is the interest rate that an insurer specifies will be credited to a fixed annuity contract or to the fixed account within an indexed or variable annuity for a defined period. Why it matters The declared rate is the central pricing variable in fixed annuities and in fixed-account components of multi-account products. It is the rate that determines the contract's accumulation in any period during which it is in effect. Naming the declared rate distinctly is what all