An annuity spread fee (also called a margin or asset fee) is a percentage that is subtracted from the index gain before crediting the annuity. For example, if the spread is 2% and the S&P 500 gains 10%, the annuity credits 8%. Spread fees are an alternative to cap rates and participation rates.
Key Points
- Spread fee: percentage subtracted from index gain before crediting
- Example: 2% spread, S&P 500 gains 10% = 8% credited
- Alternative to cap rates and participation rates
- Lower spread = more growth potential
- An independent agent can compare spread fees across indexed annuity carriers