The Daily Average Method is used to determine the indexed interest crediting rate. Instead of using the growth in an index from one point in time to another, the daily average method calculates the average value of the index over a specified period, typically a month or a year.
The Daily Average Method is used to determine the indexed interest crediting rate. Instead of using the growth in an index from one point in time to another, the daily average method calculates the average value of the index over a specified period, typically a month or a year.
By capturing the average, this method aims to smooth out the effects of market volatility. The calculated average is then compared to the starting index value to determine the indexed interest credit for the IUL policy.
This method may provide a more stable return in highly volatile market conditions compared to point-to-point methods, but it may also limit the upside potential during periods of strong market growth.
It's essential to understand the specifics of how the daily average method is used in a given IUL policy, as different policies may have variations in their calculation methods and other associated policy features.
The Daily Average Method is used to determine the indexed interest crediting rate. Instead of using the growth in an index from one point in time to another, the daily average method calculates the average value of the index over a specified period, typically a month or a year.
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