Interest Crediting

A New Way of Thinking: Interest Crediting as a Means to Mitigate Aversions

Interest Crediting is a strategy that limits risk/reward exposure to pre-set protection and return levels.

An example of an interest crediting product is one that delivers exposure to the S&P 500 on an annual basis but limits and in some case eliminates losses and may or may not limit gains annually. In utilizing interest crediting, the universe of potential returns has been shifted to eliminate extreme up and down markets. Numerous ranges and outcomes are available in interest crediting and the shifting of potential outcomes may better meet the utility and psychological needs of many.

· Better understand downside/upside potential and expected returns

· Mitigation or even elimination of aversions – particularly loss, but risk and ambiguity as well

· A simple path forward when the going gets tough – whether it’s an upheaval in the capital markets or individually driven, the shaped contours of such a solution better fit utility and psychological needs

This paradigm shift in consistency and outcome transparency allows for a smoother ride through capital events. Ultimately, it allows investors to increase their equity exposure through the better matching of expected outcomes to personal needs.

Vehicles & Tools Offering Interest Crediting Include:

· Fixed index annuities

· Indexed Universal Life

All interest crediting solutions are built using options, which by their nature are uniquely able to introduce or eliminate exposures at particular market prices.