Two methods are used to determine the current interest rate credited to a participant's account:
- Portfolio Average:
The portfolio average is a reflection of what the insurance company has earned on its entire portfolio of investments during the given year. From this, the insurance carrier forms a composite rate and the policy owners are credited with that amount.
- New Money Rates:
This is an interest rate the insurance company may credit for a set period after an annuity has been purchased. Typically, each premium payment into the fixed annuity is credited with the current interest rate declared by the company at the time of receipt for the first year. Such rates may include an interest rate bonus, which is credited for one year from the date the premium is received.
