The High Water Mark is another crediting option. It considers the index value at various points during the contract, usually annual anniversaries. It then takes the highest of these values and compares it to the index level at the start of the term. Advantage: This may credit you with more interest than other indexing methods and protect against declines in the index. Disadvantage: Because interest is not credited until the end of the term, you may not receive any index-linked gain if you surrender your index annuity early.

Index annuities may average an index's value either daily or monthly rather than use the actual value of the index on a specified date. Averaging may reduce the amount of index-linked interest you earn.

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