Simply put, it’s interest your policy earns based on positive changes in an external market index (such as the S&P 500® Index). You can choose one or more index allocations, which are a combination of an index and its associated method of determining how interest is credited.
We track the performance of your index allocation(s). If the return is positive, you earn indexed interest based on that index allocation’s crediting method. If the return is negative, you don’t receive indexed interest – but you don’t lose value, either. Because you’re not actually participating in the market or buying shares in any index, your principal is never reduced due to market downturns (although certain fees and expenses will reduce policy values).
Over time, indexed interest can increase the “cash value” of your policy – the amount of money you can access via policy loans and withdrawals.1