Indexed-Annuity Credit
Apply participation, cap, and floor to an indexed-annuity return.
Description
An indexed-annuity credit model applies participation, then a cap and floor to an index change.
An indexed-annuity credit model applies participation, then a cap and floor to an index change. The supplied floor is applied last.1
Apply participation, cap, and floor to an indexed-annuity return.
When to use Indexed-Annuity Credit
Use this tool to apply participation, cap, and floor to an indexed-annuity return.
Prepare the supplied policy terms, dates, assumptions or recorded indicators requested. Keep monetary amounts on one currency basis and select the applicable thresholds separately.
How to use Indexed-Annuity Credit and understand its results
- Prepare the supplied policy terms, dates, assumptions or recorded indicators requested. Keep monetary amounts on one currency basis and select the applicable thresholds separately.
- Enter indexStartValue, indexEndValue, participationRatePercent, creditingCapPercent, floorPercent, accountValue using the field table and calculation rules, then run the tool.
- Read indexReturnPercent, participatedReturnPercent, creditedRatePercent, interestCredit. The explanation below defines the units, signs, ordering and any flags or placeholder values.
- If the tool reports an input issue, correct the values and run it again. Apply the stated assumptions when interpreting a successfully returned result.
| Input field | Meaning | Value type; see rules below | Requirement |
|---|---|---|---|
| indexStartValue | Index start value | number; minimum: 0 | Required |
| indexEndValue | Index end value | number; minimum: 0 | Required |
| participationRatePercent | Participation rate (%) | number; minimum: 0 | Required |
| creditingCapPercent | Crediting cap (%) | number; minimum: 0 | Required |
| floorPercent | Crediting floor (%) | number | Required |
| accountValue | Account value | number; minimum: 0 | Required |
Enter positive start index, nonnegative end/account/participation/cap and finite signed floor. Return raw/participated returns, credit rate and account×rate/100 interest credit. Floor can exceed cap and therefore override it.
return%=100(end/start−1); creditRate=max(floor,min(cap,return×participation/100)) Units, indexing, boundary conditions and exceptional cases are defined in the calculation rules above.
| Output field | Meaning | Value type |
|---|---|---|
| indexReturnPercent | Index return (%) | number |
| participatedReturnPercent | Participated return (%) | number |
| creditedRatePercent | Credited rate (%) | number |
| interestCredit | Interest credit | number |
{
"input": {
"indexStartValue": 100,
"indexEndValue": 120,
"participationRatePercent": 50,
"creditingCapPercent": 8,
"floorPercent": 0,
"accountValue": 100000
},
"output": {
"indexReturnPercent": 19.999999999999996,
"participatedReturnPercent": 9.999999999999998,
"creditedRatePercent": 8,
"interestCredit": 8000
}
}Limitations and assumptions
No contract reset dates, spreads, fees, dividends, tax treatment or actual credit entitlement is modeled.
Numeric inputs must be finite. Follow the calculation-specific rules for overflow, underflow and exceptional cases. Missing required fields, extra fields, wrong value types and violations of the calculation rules are input errors.
Alternative or Complementary methods
Use Surrender Charge: Calculate annuity surrender charge after a free-withdrawal allowance. For a complementary task, use SPIA Payout: Calculate modeled SPIA payout from a caller-supplied payout rate.
References
-
Indexed-Annuity Credit — tool.io
Similar or alternative tools
- Surrender Charge
Calculate annuity surrender charge after a free-withdrawal allowance.
- SPIA Payout
Calculate modeled SPIA payout from a caller-supplied payout rate.