New Money Rates

In the insurance industry, particularly regarding Indexed Universal Life (IUL) policies, "New Money Rates" play a pivotal role. They involve:

• Application to Recent Contributions: These rates are assigned to fresh premiums or new funds added to the policy.
• Insurance Company-Determined Rates: Based on prevailing market conditions and chosen index performance, like the S&P 500.

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Function and Variability:

• Cash Value Growth Calculation: Used to determine the policy's cash value component increase.
• Fluctuating Nature: These rates may change in response to evolving market scenarios.

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Policyholder Considerations:

• Range of Growth: It's important to note that new money rates may come with a guaranteed minimum and a maximum cap.
• Market Fluctuations Protection: Ensures that the cash value growth remains within a specific range, regardless of market volatility.

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Understanding new money rates is vital for IUL policyholders, as these rates significantly influence their policy's cash value growth trajectory.