Annual posting of bills｜What is the guaranteed minimum return of an index insurance account?

In 2022, the U.S. stock market has experienced a big ups and downs.

The former Internet celebrity fund manager "Sister Wood", the total size of its Ark fund has shrunk by 80% at most during the year, and the total investment loss in 2022 is close to 67%; the virtual currency market has plummeted, with FTX, Luna, Celsius, Voyager Various scandals broke out one after another, such as bank runs, bankruptcy, and running away, causing relevant investors to suffer serious losses.

提供Fund Protection FunctionOfIndex insuranceProducts will shine in 2022.In this article, TheLifeTank©️ According to Life Insurance Financial AdvisorHeather Xiong CFP©️An annual statement document is provided to educate and explain the annual minimum guaranteed rate of return in index insurance accounts.

What is the fund protection function of the index insurance account?

The contract documents of index insurance products will state that even when the stock market falls (as shown in the red line in the figure below), the insurance company will promise that the annual cash value income of a specific index account will not be less than 0%.

This 0% is the basic underpinning protection function of index insurance.In the worst case, a "protected floor" rate of return can be given to the policy account.This "protective bottom", we call it Floor.

The policyholder injects funds into this type of index account and is protected by Floor, so as to achieve the goal of asset preservation and steady appreciation.

Annual posting list: the minimum annual rate of return that is actually greater than 0%

We select an index insurance account statement sent in February 2023 to give a specific educational explanation of this function.

The red box shows that in the past year, the S&P 500 Index,Down -8.3140%.If, in the past year, the policyholder invested in the S&P 500 on his own, thenThe funds in the investment account will directly lose -8.3140%.

However, the statement of the insurance account shows that due to the index life insurance providedThe function "Floor", provides a protection function for the funds in the index account.Therefore, while the U.S. stock market is falling,There is no loss of funds in the index account,The annual income is settled according to the protection rate of 0%.

In addition, the green box part indicates that the insurance company also promises that if the market falls, the insurance company will give the policyholder an additional minimum annual income, which is shown in the bill as $488.5.

To sum up this, in the past year,The funds in the index insurance account did not lose money due to the stock market decline, but instead obtained a minimum annual return of $488.5.

Article summary

In this column, we use an index insurance account annual statement document to explain the function of "Floor" - fund backing protection.

In the US index insurance market, majorBrand mainstream insurance company, all provide policyholders with "minimum guaranteed annual income" insurance products, and the performance and indicators of these index insurance products are also different.

During the insurance application process, the policyholder canProfessional Life Insurance Financial AdvisorWith the assistance of the company, through the sharing of professional experience, combined with the actual assets of their families, they can purchase insurance account products that meet their own needs. (full text)

Buffett's investment principle: "Don't lose money" | What are the core functions of asset insurance for hedging?

The number of millionaires in retirement accounts has dropped by 29%, and "never lose money" is the goal for 2022

"Exclude the possibility of asset return being '0'", another new option for US dollar asset insurance

Evaluation｜Annual income 13.75%, interpretation of 2022 common problems of 1Q2 insurance account statement (picture)