Monthly Averaging

An index annuity interest crediting method that is calculated by comparing the underlying index value on the first day of the contract year to the monthly average of that same index at the end of the year. The monthly average index value equals the sum of the monthly index values recorded each month over the course of the preceding contract year, divided by twelve. At the end of each annual index term, the percentage change between the index starting value and the index monthly average value is used in determining the amount of interest that is credited to the annuity, if any.