Common use of Target Credited Rate Clause in Contracts

Target Credited Rate. To determine the target credited rate, the required spread must be subtracted from the expected net investment rate. The required spread varies by plan and by duration within plan. The target credited rate may be modified for marketing reasons provided that adjustments are offsetting in the aggregate. Antiselection in favor of artificially high rates will be considered in this process. An example is shown in the following Table 3: Table 3 Target Credited Rate Life Annuity Expected Net Rate 7.95% 7.95% Less: Required Spread 1.5% 1.75% Calculated Credited Rate 6.45% 6.20% Marketing Adjustments 0.4% -0.10% (Assuming 80% annuities) Target Credited Rate 6.85% 6.10%