Cost Of Living Adjustment and
Consumer Price Index (CPI)
you are concerned that the purchasing power of your fixed income
payments will decline due to inflation, you might want to consider
selecting an Inflation Adjustment option.
Cost of living adjustment - C.O.L.A.
This is a life annuity with payments that increase
or decrease by a set percentage each year.
A annually compounded increase from 1% to 10%. Initial benefit can be substantially lower than
So, put simple a $1,000 per month income with a 3.00% compounding C.O.L.A. would
be $1,030 in year 2, $1,344 in year 10 and $1,806 in year 20. The longer you
live the better the return. Minimum guarantees and money back death benefit
guarantees are available.
CPI-U inflation adjustment - (Consumer Price Index)
Currently available on qualified rollovers only.
Our fixed income annuity with
inflation adjustments is tied to the Consumer Price Index (CPI-U), which
enables you to receive an inflation-indexed stream of income that is
guaranteed* for life.
Your income payments will be adjusted
each year on January 1st to correspond with changes in the
non-seasonally adjusted Consumer Price Index - U ("CPI") published by
the Bureau of Labor Statistics. These adjustments can either raise or
lower the payments for the next year, depending upon changes in CPI-U.
As illustrated in the table below,
the maximum annuity income payment increase permitted in any single year
will be limited to 10% (Year 7). As added protection, any decrease will
never reduce the payment below the initial benefit amount (Year 3).
Because of this guaranteed minimum payment level, any negative movements
in CPI which are not applied to the Annuity Income amount will be used
to offset future CPI increases (Year 4).
ADJUSTMENT USING CPI
The table below is based upon an
initial monthly payment of $500.00. Increases or decreases in the
movement of the CPI-U Index** are reflected in the second column. The
third column represents the adjustments made
to the monthly payments every
January 1st, and illustrates how payments never fall below the initial
premium (floor), excess declines are applied (offset), and how increases
are limited to 10% (cap) in any single year.
Change in CPI index
Change in modal
||- 2.4% (floor)
||+ 3.2% (offset)
||+ 10.0% (cap)
* Guarantee is based
on claims-paying ability of insurance companies that issue the annuity.
** Changes in CPI
are for illustration purposes only and do not reflect the actual index
changes for any specific time period.
*** First January
Payment adjustment will be prorated based upon the date of annuity
purposes only/not for distribution.
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