Point-to-point crediting is a method of calculating indexed annuity interest. Interest is calculated based on the change in the index from the beginning to the end of a crediting period (typically 1 year). If the index gains, you earn interest up to the cap rate. If the index declines, you earn 0%.
Key Points
- Point-to-point: interest based on index change from beginning to end of crediting period
- Crediting period: typically 1 year
- If index gains: earn interest up to cap rate
- If index declines: earn 0%
- Most common crediting method for indexed annuities