Assumed Interest Rate (AIR) is the rate of growth built into an annuity table that determines payout on a variable annuity and provides a floor for gains. What does AIR stand for?

Assumed Interest Rate (AIR) is the rate of growth built into an annuity table that determines payout on a variable annuity and provides a floor for gains. What does AIR stand for?

• A. Guaranteed Interest Rate
• B. Investment Rate
• C. Assumed Interest Rate
• D. Participation Rate

Answer: (C)

The Assumed Interest Rate is the rate used in the payout table to project how much a variable annuity will pay and to set a floor for gains. It acts as the baseline growth the insurer uses when calculating guaranteed payouts, so even if actual returns are lower, the payout outlook is built around this assumed growth rate. It isn’t the contract’s guaranteed interest rate, nor the investment rate or a participation rate, which refer to different concepts in other types of annuities.

The Assumed Interest Rate is the rate used in the payout table to project how much a variable annuity will pay and to set a floor for gains. It acts as the baseline growth the insurer uses when calculating guaranteed payouts, so even if actual returns are lower, the payout outlook is built around this assumed growth rate. It isn’t the contract’s guaranteed interest rate, nor the investment rate or a participation rate, which refer to different concepts in other types of annuities.