An examination of first-year credited interest for annual reset structured index annuities purchased in 2004 found a wide range of 2005 returns depending upon the structure and the date purchased.
As an example, an index annuity purchased in the summer of 2004 credited from 0% to 11% interest a year later–depending on the contract anniversary and index annuity selected.
In general, the annual point-to-point method with cap and monthly cap gain designs credited the highest interest rates, while daily and monthly averaging structures were lower.
The most consistent method was the trigger structure that credits a predetermined interest rate if the index does not end up lower at contract year-end. Annuities with trigger methods credited from a little more than 4% to about 6% during the year, comparing favorably with other savings vehicles.