How do I calculate the index credits to my equity-indexed annuity?
The formula is simple! (Assuming you are using an annual point to point crediting method) You take the current index value and divide by the previous index value, then subtract 1.0. Your answer will be the percentage of gain or loss within that index.
Example: On February 2, 2011 the ending index value of the S&P 500 was 1304.03. On February 2, 2012 the ending index value of the S&P 500 was 1325.54. So we take 1325.54 and divide it by 1304.03 equaling 1.016. We then subtract 1 from 1.016 and we have our index credit of .016 or 1.6%.
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