How to enter fixed index annuity and crediting method values

Enter a Fixed Annuity

Fixed index annuities can be entered on the Assets > Annuities tab by choosing Fixed Index Annuity from the Annuity Type dropdown menu or by selecting Fixed Index Annuity from the annuity type chooser on the side panel that opens in the plan stepper or in Life Hub.

The credited returns for a fixed index annuity will depend on two things:

1. The indexes tracked
2. The crediting method(s) applied in the annuity

Which Index is Tracked?

There are two options for selecting an index to track for the fixed index annuity's returns. You can choose between the FIA Index and Customize options from Asset Allocation chooser. If you choose FIA Index (the default), you will choose an index from the FIA Index dropdown menu. Currently, the only option offered is the Large Cap Price Index.

If you choose to Customize the index or mix of indexes, you can choose an asset allocation mix from the range of available asset classes that you feel best matches the index or indexes followed by the FIA you are including in the plan. Many indexes available for FIAs follow the price return, not the total return, of the index. 

So, if you choose this custom approach, you may want to go to Annuity Settings > Crediting Methods > Advanced Settings and enter a value for Reduction in asset class returns to remove dividends. This is the amount by which you want to reduce the total returns of your chosen custom asset class mix in order to remove dividend returns and turn this index mix into a price return.

What Crediting Methods are Applied?

Once you've chosen an index to track, you can set one or more crediting methods for the annuity. The following methods are available.

1. Cap: Credit no less than 0% and no more than the cap rate every year. For example, if the index return is 15% and the cap is 10%, credit 10%. If the index return is 5% and the cap is 10%, credit 5%.
2. Participation Rate: Credit no less than 0% and no more than the participation rate multiplied by the index return every year. For example, if the participation rate is 60% and the index return is 10%, credit 6%.
3. Fixed Rate: Apply a fixed rate every year.

You can apply a mix of these crediting methods to a single annuity by unchecking the Use a single crediting method for this annuity box. This will allow you to allocate among cap, participation rate, and fixed rate option. The total allocation among the crediting methods must sum to 100%.

You can also apply crediting rates in two different phases if you uncheck the Use the same crediting method values throughout plan box. This will allow you to specify an End of Term date after which a new set of crediting method values will be applied

The amount in the Value field will be applied before this date and the amount in Value after Term will be applied thereafter.