Defined terms for the annuity market and lifetime income landscape.
Credit spread is the yield differential between a corporate bond and a US Treasury bond of comparable maturity, compensating investors for the risk that the corporate issuer may default or experience credit deterioration.
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 index return is credited.
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.
