Question

K has an Index annuity with the S&P 500 determining his interest rate performance. Last year the S&P 500 had 30% return. K's annuity will be accredited:

A: The entire interest rate of 30%
B: Whatever the company decides
C: A high rate or return but it will be capped at a certain percentage.
D: 3% fixed rate

Answer 1

An Index annuity with the S&P 500 determining the interest rate performance means that the annuity's interest rate is based on the performance of the S&P 500 index. However, it is not guaranteed that the annuity will be accredited with the entire interest rate of 30%. The actual rate will depend on the terms and conditions of the annuity contract.

Step-by-step explanation:

An Index annuity with the S&P 500 determining the interest rate performance means that the annuity's interest rate is based on the performance of the S&P 500 index. If the S&P 500 had a 30% return last year, it does not mean that K's annuity will be accredited with the entire interest rate of 30%. There are different possibilities:

1. If the company decides, K's annuity may be accredited with whatever interest rate they determine.
2. K's annuity may be credited with a high rate of return, but it will be capped at a certain percentage.
3. K's annuity could have a fixed rate of 3%, which is not related to the S&P 500 performance.

It is important to review the terms and conditions of the specific annuity contract to determine how the interest rate is calculated and accredited.