How do the common indexing methods differ

Annual reset

Index-linked interest, if any, is determined each year by comparing the index value at the end of the contract year with the index value at the start of the contract year. Interest is added to your annuity each year during the term. The previous year's ending point is the following year's beginning point. Your gains are locked in every year.

High watermark

The index-linked interest, if any, is decided by looking at the index value at various points during the term, usually the annual anniversaries of the date you bought the annuity. The interest is based on the difference between the highest index value and the index value at the start of the term. Interest is added to your annuity at the end of the term.

Long term point to point

The index-linked interest, if any, is based on the difference between the index value at the end of the term and the index value at the start of the term. Interest is added to your annuity at the end of the term.

Short term point to point

The index-linked interest, if any, is based on the difference between the index value at the start of the term and the value every year at each anniversary. With an annual reset these gains are locked in every year.


For a free consultation please click below and fill out the form. There is NO obligation.