1-Year Monthly Cap Index Strategy
This strategy credits interest to your annuity once a year based upon the sum
of 12 monthly percentage changes in the S&P 500® Index, subject to a monthly
cap rate. It calculates the monthly percentage change by comparing the index
value each month with the index value on the same date as of the prior month.
The S&P 500® Index Value is reset on that date each month during the contract
year, meaning that each month’s ending index value becomes the next month’s
beginning value.
What is a Monthly Cap Rate?
A Monthly Cap Rate is an upper limit, or `cap,’ on an
index-linked interest rate. For example, if your contract
had a 1.75% cap rate and the index increased by 4%
that month, 1.75% would be used in the calculation,
not 4%. Caps are declared and guaranteed each
contract year, and can never be less than your
contract’s minimum cap rate.
The sum of the monthly index changes used to calculate interest may be
much different than the annual change in the index. Your interest is calculated
based on month-to-month index performances during your annuity’s contract
year, which is based on the date you purchased the contract, as opposed to a
calendar year.
This strategy does not apply a floor to negative
monthly index performance. Therefore, it’s possible to
receive 0% interest in any contract year, even if the
index increases overall for that contract year.
Interest credits for any contract year can be positive or zero. In years when the
index does well, you could participate in a portion of that upward performance.
In years of market downturns, it’s possible that you could have 0% interest
credited to your annuity for that contract year.
How is this strategy different from others?
This strategy provides 100% participation in index
returns up to each month’s cap. It would typically
credit more interest in years when the market index
experiences steady growth throughout the year.
At each contract anniversary, any interest credited to your annuity is
automatically locked in so it becomes part of your annuity’s new Accumulated
Value. This means that even if the index value declines in later years, your
premium and any interest that has been credited to your contract cannot be lost
to future market downturns.
1-Year Monthly Cap Index Strategy Interest Calculation Hypothetical Example
The capped monthly index percentage change is the lesser of: 1) the index’s percentage increase or decrease that month,
or 2) the monthly cap rate. Here is how the first monthly index percentage change was calculated in this example:
Monthly Cap Rate = 1.75%
S&P 500® Index Value on first monthly
anniversary, 4/30/10 = 1186.69
Date
S&P 500® Index Value on contract issue
date, 3/31/10 = 1169.43
3/31/2010
1169.43
4/30/2010
1186.69
1.48%*
1.48%
5/31/2010
1089.41
-8.20%
-8.20%
6/30/2010
1030.71
-5.39%
-5.39%
7/31/2010
1101.60
6.88%
1.75%
8/31/2010
1049.33
-4.74%
-4.74%
9/30/2010
1141.20
8.76%
1.75%
10/31/2010
1183.26
3.69%
1.75%
11/30/2010
1180.55
-0.23%
-0.23%
12/31/2010
1257.64
6.53%
1.75%
1/31/2011
1286.12
2.26%
1.75%
2/28/2011
1327.22
3.20%
1.75%
3/31/2011
1325.83
-0.10%
-0.10%
*(1186.69 - 1169.43)
=1.48%
1169.43
S&P 500®
1500
1200
Monthly %
Change
1
Interest Credited for This Contract Year
Capped Monthly
% Change
-6.69%
0.00%
3/
3
1/
1
11
11
2/
28
/
/1
0
31
/
1/
12
/3
1
0
1/
1
/3
0
11
10
/3
10
9/
3
0/
10
10
31
/
31
/
7/
8/
0
10
30
/
6/
0
1/
1
5/
3
0
0/
1
1/
1
4/
3
/1
0
Sum of 12 Capped Monthly Index % Changes
900
3/
3
Index Value
17645
This strategy information sheet must be used with an applicable Aviva fixed indexed annuity product brochure.
(Rev. 5/11)
Hypothetical Strategy Example
The chart below shows the different possible Accumulated Values that
would have been produced in an Aviva fixed indexed annuity. It illustrates
the highest, average, lowest, and the contract minimum performance
that would have been credited over any 10 year period in the last 30 years
ending March 31, 2011.
Assumptions
• Initial Single Premium: $100,000
• Annuity in force for 10 Years
• No Withdrawals, No Additional Premiums, No Premium Bonus
• Monthly Cap Rate: 1.75% each month for all contract years
These assumptions are not guaranteed; the use of alternate premium and rate assumptions
could produce significantly different results.
The numbers for this example
are only applicable to a 10-year
withdrawal charge product with
no premium bonus.
Strategy Value Minimum
This amount assumed that the worst case
scenario of the 1-Year Monthly Cap Index
Strategy crediting 0% interest over the 10-year
period.
200000
$160,859
This amount assumes the 1-Year Monthly
Cap Index Strategy crediting interest during
the lowest strategy performance over 10
consecutive years during the last 30 years.
150000
$130,165
100000
$100,000
Lowest 10-Year Result
Average 10-Year Result
$108,800
This amount shows what the 1-Year Monthly
Cap Index Strategy averaged for each
consecutive 10-year period during the last 30
years.
Highest 10-Year Result
This amount assumes the 1-Year Monthly
Cap Index Strategy crediting interest during
the highest strategy performance over 10
consecutive years during the last 30 years.
50000
0
Strategy
Value
Minimum
Lowest
10-Year
Result
Average
10-Year
Result
Highest
10-Year
Result
This hypothetical example assumes a new contract was issued on the first business day of each month over the last 30
years utilizing the assumptions shown above. It also assumes that the contract was then held for 100a years and no
withdrawals were taken during the time period shown. Although this product was not available during the last 30 years,
actual historical prices of the S&P 500® Index were used in this example, which was created solely for comparative values
and is not an indication of the annuity’s future performance.
Fixed Indexed annuities are not stock market investments and do not directly participate in any stock or equity investments.
Market Indices do not include dividends paid on the underlying stocks, and therefore do not reflect the total return of
the underlying stocks; neither an Index nor any market-Indexed annuity is comparable to a direct investment in the equity
markets. Clients who purchase Indexed annuities are not directly investing in a stock market Index.
“Standard & Poor’s” and “S&P 500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
Aviva Life and Annuity Company, West Des Moines, IA. These products are not sponsored, endorsed, sold or promoted by
Standard & Poor’s and Standard & Poor’s make no representation regarding the advisability of purchasing these products.
This strategy information sheet must be used with an applicable Aviva fixed indexed annuity product brochure.
17645
(Rev. 5/11)