Assumed Investment Return

What Does Assumed Investment Return Mean?

An assumed investment return is the amount of return that is needed on investments to keep variable annuity payments level. Variable annuities are often used in life insurance. They are an alternative to fixed annuities, which provide a fixed rate and, unlike variable annuities, are not subject to the performance of stocks, bonds, mutual funds, or other investments.

Insuranceopedia Explains Assumed Investment Return

Many people use variable annuities as a part of their life insurance policies because the investment component they offer has the potential to increase the amount of money that the annuity pays out. However, the success of the investments could have an impact on the annuity payment levels. As long as the investments perform above the assumed investment return, the variable annuity payments will remain level and will not be subjected to large price swings.