Index Crediting
A method used in indexed policies to calculate interest credits by reference to an external index under a contract formula.
Why it matters
The policy generally does not directly invest cash value in the index, and caps, participation rates, spreads, floors, and timing affect credits.
Where you may see it
Indexed universal life illustration, crediting method description, annual statement, and index account allocation.
What to verify
Index used, segment dates, cap, participation rate, spread, floor, dividends excluded from index returns, and guaranteed minimums.
Do not confuse it with
Variable investment subaccount, whose value directly fluctuates with investment performance.
Read Index Crediting in context
Start with the exact sentence where the term appears, then read the definition, schedule, and any referenced rider together. The practical concern is this: The policy generally does not directly invest cash value in the index, and caps, participation rates, spreads, floors, and timing affect credits. Locate the relevant records—indexed universal life illustration, crediting method description, annual statement, and index account allocation.—and compare them with the issued contract rather than a sales summary.
Before signing, changing coverage, or making a claim decision, record the points that control the result: Index used, segment dates, cap, participation rate, spread, floor, dividends excluded from index returns, and guaranteed minimums. If another policy uses similar wording, do not assume it has the same effect.
Keep the dated page or form with your notes. If the definition changes the benefit, premium, ownership rights, or a deadline, ask the issuing insurer for a written explanation tied to the policy number.
Reliable places to check
- Your issued policy and application copy.
- NAIC consumer life insurance resources.
- Your state insurance department for licensing and consumer help.