Performance Triggered

Performance triggered is a term that refers to a fixed indexed annuity crediting method. Indexed annuities credit a level of interest to the contract owner, and this level of credited interest can be indexed or linked to the performance of equity markets. The performance triggered method involves a level of credited interest that is based on the reference index meeting or exceeding some level of gain or positive performance. For example, assume that the reference index begins the year at 100. Next, assume that the value of this reference index at the end of the year is 102. The positive return or performance of this index would trigger a declared crediting rate that is set at contract inception. The declared rate may exceed the level of index performance, but it may also be less than the performance of the index if the returns are strong. The declared rate is used to credit a level of interest to the contract owner.