Policy Anniversary vs. Sweep Date: Learn the Difference

Many clients are confused about when index performance is measured in indexed annuities and indexed life insurance. They often think it happens on the policy anniversary, but that’s rarely the case.

The policy anniversary is the policy’s birthday.

How long the contract has been in force may matter for things like rider or benefit eligibility, or withdrawal and surrender charges.

But when it comes to index performance and interest credits, what matters is the sweep date.

The sweep date is when premium dollars are moved into an indexed strategy.

Each sweep creates an index segment with its own start date, end date, and interest crediting date (1 or 2 years later, depending on the interest crediting option).

• Indexed life insurance policies sweep on the 14th of the month
• Indexed annuities sweep on the 7th, 14th, 21st, or 28th of the month

Clients may have many index segments, for example in the case of:

• Monthly contributions (flexible premium indexed annuities)
• Monthly allocations over the course of one year, using the Systematic Allocation Rider (life insurance)
• Monthly allocations over the course of one year, using Dollar Cost Averaging (single premium indexed annuities)

 

Explaining the difference

Clients may expect to see interest credits on their policy anniversary (e.g., one year after getting the policy) and become confused and ask why they don’t see the performance of the index reflected in the value of their life insurance policy or annuity.

To avoid this frustration, it’s best to explain the difference between policy anniversary and sweep date anniversary when you sell the policy — and to be clear that interest crediting is only tied to sweep dates. For example, you could say:

“Your policy anniversary marks how long you’ve had the policy, but your sweep date is when your money starts tracking the performance of the index. That’s the date that matters for interest crediting one or two  years later.”

Agents who take the time to clearly educate clients on this distinction:

• Reduce client confusion and service calls
• Strengthen credibility and trust
• Improve long-term client retention

Revisit this topic during annual reviews, because many clients will need a reminder!

 

 

 

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